Germany has traditionally been one of Iran's biggest trading partners. Exports to Iran grew 8.3 percent in 2008 to reach 3.9 billion euros (5.2 billion dollars), according to official statistics.

But the economy ministry called on German firms in a letter dated April 27 not to participate in two recent events attended by Iranian delegations aimed at promoting their wares, the Handelsblatt business daily reported.

"These events stand in clear contrast to the policy of the federal government and could mean serious damage for German foreign policy," the paper cited the letter to the German association promoting trade with the Middle East (Numov) as saying.

The chairman of Numov is former chancellor Gerhard Schroeder, who drew fire for a recent visit to Iran and who has also been criticised for being cosy with Russia.

The pressure is bearing fruit, Handelsblatt said, with trade between Germany and Iran falling 30 percent in January compared with a year earlier, although trade with other countries is growing.

The German government said in January it would drastically cut its export guarantees for companies trading with Iran after sharp criticism from the United States and Israel.

Germany is one of six powers -- with the United States, China, France, Britain and Russia -- trying to persuade Tehran to abandon its nuclear programme, fearing that Iran wants to develop atomic weapons.

The UN Security Council has slapped three sets of sanctions on Iran, which insists its nuclear activities are merely for civilian purposes.

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