Obama hopeful of Mideast peace progress

DRESDEN, Germany

US President Barack Obama said on Friday he was hopeful of making serious progress in reviving Middle East peace talks this year but made clear the path would be tough.

Speaking a day after offering the Islamic world a "new beginning" with the United States, Obama reaffirmed his commitment to the peace process, saying he feared that if action was not taken now Palestinians and Israelis could become too entrenched to return to the peace table.

"I am confident that if we stick with it, having started early, we can make some serious progress this year," Obama told a news conference in Dresden with German Chancellor Angela Merkel.

"The moment is now for us to act on what we all know to be the truth, which is that each side is going to have to make some difficult compromises," Obama said after talks with Merkel.

Obama was in Germany on the third stop of a four-country trip that has already taken him to Saudi Arabia and Egypt, where he delivered a major address to Muslims on Thursday.

Obama will pay homage to the victims of World War Two and the Holocaust when he tours the Buchenwald concentration camp later with Merkel.

The two leaders also discussed the nuclear stand-off with Iran, the global financial crisis, climate change and the fate of prisoners at the US military prison at Guantanamo Bay.

Obama has made finding a solution to the Israeli-Palestinian conflict a top foreign policy priority since being sworn into office on January 20.

He has dispatched special envoy George Mitchell to the region, hosted new Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas at the White House and held talks with Saudi Arabia's King Abdullah.

"I believe with the new US administration, with President Obama there is a unique opportunity to see to it that the negotiation process is revived," Merkel said.