The talks -- part of the so-called Blaesheim process of informal Franco-German summits -- also covered Chirac's reformulation last week of France's nuclear defence policy as well as French hopes, opposed by Germany, to cut value added tax for the restaurant trade.

President Chirac greeted the chancellor early evening at the prefecture -- or governor's office -- in Versailles, which served as headquarters for the German emperor Wilhelm II after the Franco-Prussian war of 1870.

Merkel had earlier inaugurated an exhibition called "Splendours of the Court of Saxony" at the 17th-century palace of Versailles, former residence of French kings.

At a news conference before dinner, Chirac said the two leaders had prepared the ground for two major EU meetings: a ministerial council in March where energy will be the main theme, and the biannual summit in June which will focus on the institutional future of the 25-member bloc.

Monday's bilateral came at a sensitive time for Franco-German relations, with the two governments struggling to reignite their historic sense of purpose at the heart of the EU, commentators said.

French Prime Minister Dominique de Villepin and Foreign Minister Philippe Doutse-Blazy have both been to Berlin in the last two weeks in a bid to boost the partnership.

But with Merkel at the very start of her term in office and Chirac nearing the end of his, "Europe may not get any of the decisions it needs till after the French presidential elections" in spring 2007, said Sylvie Goulard of the Centre for International Research (CERI) in Paris.

Considerable uncertainty hangs over the fate of the EU constitutional treaty which was rejected in referendums in France and the Netherlands last year but approved by the German parliament and 12 other countries.

Sources close to the Elysee said that while France would be willing to preserve parts of the text and discard others, Merkel's view was that the constitution should not be broken up piecemeal.

Another source of potential discord is France's wish -- enshrined in a Chirac election promise -- to bring down value added tax for the hotel and restaurant trade to 5.5 percent, an idea vigorously opposed by Berlin.

Speaking at the press conference, Chirac conceded that France was unlikely to get its way when the matter is voted on at an EU finance ministers' meeting Tuesday.

Some in Germany also reacted coolly to Chirac's speech on Thursday in which he for the first time raised the threat of targeting French nuclear weapons on rogue states that back terrorism.

But Chirac said that "no-one in Germany need be even the slightest bit worried" by French nuclear policy, and Merkel said she found nothing to criticise in the French position.

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