The European Union and a group of Gulf states must complete negotiations on a long-awaited pact to create a free trade zone, Chancellor Angela Merkel said.

"I think that now is the time to come to an agreement," Merkel told an economic conference in the Arab emirate Abu Dhabi. "That would be a significant signal."

Earlier, in Saudi Arabia, Merkel met the general-secretary of the Gulf Cooperation Council (GCC), Abdul Rahman, to discuss next steps in the trade talks between the EU and Gulf states.

"There is a clear political desire on both sides to get a swift resolution to the disputed points," a German official on a Middle East tour with Merkel said on condition of anonymity.

Merkel presides over Germany's EU presidency, which began last month and runs until the end of June.

The GCC comprises Kuwait, Qatar, Oman, Saudi Arabia, Bahrain and the United Arab Emirates.

Talks between the group and the EU began in 1990 but were slowed by the GCC not agreeing until 1999 to move towards forming a customs union, and a new EU negotiating strategy adopted in 2001 to include the services sector in the talks.

Merkel also said that Germany was looking to widen its pool of energy suppliers and secure deals with reliable partners.

"We are interested in linking up with new markets for liquid gas," Merkel said. "In order to do this we need long-term reliable partners."

Germany has stressed the need for a more independent energy policy for the European Union after its reliance on Russia for crude oil was made apparent by supply shortages following disputes over pricing between Moscow and transit nations.

The EU is the GCC's top trade partner, while the Gulf group ranks number six for the 27-nation EU.

Other issues Merkel wants to discuss with Middle East leaders are Iran's nuclear program and her efforts to revive the stalled peace process between the Israelis and Palestinians.

In addition to Saudi Arabia, Merkel has visited Abu Dhabi, Egypt, Dubai and Kuwait. (Reuters)