VIDEO: Bush Urges Diplomacy With Iran

Merkel backed Bush in saying new sanctions against Tehran may be necessary if it does not cooperate with western powers.

U.S. President George W. Bush said on Wednesday he wanted to resolve the showdown over Iran's nuclear programme peacefully, but reiterated that all options were on the table and that new sanctions may be needed.

"I just told you all options are on the table," Bush told a joint news conference with Chancellor Angela Merkel north of Berlin during his week-long tour of Europe.

"The first choice is to solve it diplomatically and that's exactly what we're doing. The message to the Iranian government is very clear."

Merkel backed Bush in saying new sanctions against Tehran may be necessary if it does not cooperate with western powers and suspend its nuclear enrichment work.

Bush, visiting Europe for the last time before his presidency ends in January, met Merkel at a government residence north of the German capital before heading to Rome, Paris, London and Belfast in Northern Ireland.

Bush remains unpopular in western Europe more than five years after he clashed with Germany, France, Russia and others over the U.S.-led invasion of Iraq.

He told reporters in Meseberg that he had no regrets about going to war to oust Saddam Hussein but admitted he could have used better rhetoric to make his case for the U.S.-led invasion.

Merkel, a pro-American conservative who grew up in East Germany, has worked hard to repair ties between the Cold War allies and has forged a close relationship with Bush, who started his tour at a U.S.-European Union summit in Slovenia.

Bush is keen to win European support for a tougher round of sanctions against Iran after world powers agreed a series of new punitive measures in March. While Europe has signalled support for the U.S. drive, it is also looking past Bush.

Democratic candidate Barack Obama is especially popular in Germany, where he is seen by many as another President John F. Kennedy, who won over the country in 1963 with his celebrated "Ich bin ein Berliner" speech.

Obama has expressed a willingness to talk directly to Iran over its nuclear programme, a move the Bush administration has repeatedly rejected.