"I think the problem can be resolved not militarily but politically and economically," Peres told reporters, on the sidelines of a meeting in the northern Italian town of Cernobbio that also included Palestinian president Mahmud Abbas.

In remarks carried by ANSA news agency, he described a military option in dealing with Iran as "an error."

"So long as there is a possibility of acting politically and economically, it is much better," Peres said.

On Thursday, French President Nicolas Sarkozy warned Tehran that its determination to press on with its controversial nuclear drive risked an Israeli strike that would be a "catastrophe."

Peres and Abbas shook hands and embraced at the meeting largely dealing with the economy that gathers pundits and a variety of international leaders.

US Vice President Dick Cheney was expected later in the day, after wrapping up visits to Azerbaijan, Georgia and Ukraine.

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