BERLIN (AP) — Germany's chancellor and the ruler of Qatar called Wednesday on Israelis and Palestinians to press forward with peace talks, while the two nations took steps to further strengthen their economic ties.

Moving ahead with the Mideast peace process is in everybody's interest, Angela Merkel and Sheik Hamad bin Khalifa Al Thani stressed at a joint news conference following a meeting in Berlin.

Merkel urged both sides to show a "willingness to compromise." She added the Arab countries' peace initiative has played an important role in launching the latest negotiations. "Now those talks should be continued," Merkel said.

Al Thani, speaking through a translator, said the peace talks should be continued and appealed to Israel to show "the wisdom to allow the foundation of a Palestinian state, because this would lead to security and stability in the region."

Palestinian President Mahmoud Abbas recently threatened to withdraw from the newly launched U.S. brokered negotiations if Israel resumes building in the West Bank settlements. He said he wants to discuss the matter at a meeting of the 22-member Arab League next Monday.

While in Berlin Al Thani also met with German President Christian Wulff and Economy Minister Rainer Bruederle.

"The economic ties with Qatar are excellent and offer both sides good opportunities," Bruederle said in a statement.

Germany's economy minister and his counterpart Sheik Jassem Al Thani signed, among others, a memorandum of understanding to cooperate in the development of solar powered energy.

Business ties between both countries have recently intensified.

Qatar Holding LLC, a state-backed investment company, owns around 17 percent of carmaker Volkswagen AG's shares since last year, making it the Emirate's largest single investment.

Germany's state-owned railway company Deutsche Bahn AG, in turn, has signed a contract worth some $26 billion to build a railway system in Qatar from scratch — a key part of the natural gas-rich Gulf sheikdom's expansion plans.

Merkel called Qatar "a very attractive place for investments", and stressed that the Emirate was also welcome as an investor in Germany, adding "the cooperation of Qatar and the Volkswagen AG is an outstanding example for that."