"Germany will not support a Palestinian Authority that does not recognize Israel," Merkel said at a joint news conference with Palestinian leader Mahmoud Abbas, who joined Hamas in urging the international community not to cut valuable funding.

The first foreign leader to meet the beleaguered Palestinian leader since Hamas' stunning election victory last week, Merkel demanded from the faction to renounce violence and recognize Israel's right to exist.

"We expect all political forces that assume responsibilities to firstly recognize Israel's right to exist, secondly not resort to violence and thirdly to accept steps already committed to in the peace process and to continue this process," she said. "Of course, that also applies to those who won most seats in parliament, in other words Hamas. I clearly said that we need clarity very quickly because the peace process must go on."

Just hours after a similar appeal from Hamas leader Ismail Haniya, Abbas urged the international community to maintain its financial aid to the Palestinians and reiterated his commitment to pursuing peace talks with Israel.

"Our talks focused on the need to continue this aid so that our people can stand on their own feet," Abbas said. "We reiterated our commitment to reach peace by returning to the negotiating table."

EU foreign ministers echo Merkel

But in Brussels, EU foreign ministers echoed Merkel's demand that Hamas renounce violence and recognize Israel as key conditions for continuing to channel aid to the Palestinian Authority.

The 25-member bloc is the biggest donor of aid to the Palestinian Authority, providing about 500 million euros ($613 million) annually since 2003.

The Abbas-Merkel summit came a day after she and Israel's Acting Prime Minister Ehud Olmert made a joint pledge not to deal with Hamas until it recognized Israel's right to exist and renounced violence.

Merkel arrived in the region less than a week after Hamas' landslide victory, trouncing Abbas's long-dominant Fatah movement in an historic election.

Israel campaigns to isolate Hamas

Israel, appalled at the prospect of a Palestinian government led by a group calling for its destruction and responsible for scores of suicide attacks, has spearheaded an international campaign to see Hamas isolated.

Olmert and Merkel both announced Sunday that there could be no dealings with Hamas unless it recognised the Jewish state's right to exist.

Representatives from the European Union, Russia, the United Nations and the United States -- the four powers behind the stalled roadmap peace plan -- also sought Monday to thrash out their strategy toward Hamas in London.

Apart from meeting Israeli President Moshe Katsav, Merkel met Benjamin Netanyahu, the leader of Israel's right-wing Likud party, and visited Jerusalem's recently-renovated Yad Vashem memorial to victims of the Holocaust.

She also met Israeli Foreign Minister Tzipi Livni and like all visiting foreign leaders, planted a tree in Jerusalem's Grove of Nations.