Berlin  - Chancellor Angela Merkel Wednesday blamed the radical Palestinian movement Hamas for the latest flare-up with Israel and said Germany would do all it could to promote peace in the Middle East.

In a New Year address, the chancellor also said the world can recover from the global financial crisis only if it recognizes the mistakes of the past and learns from them.

The cause and the consequences of the current violence in the Gaza Strip should not be forgotten, Merkel said in her speech, a copy of which was released in advance on Tuesday.

"The terror perpetrated by Hamas is unacceptable," she said. "But we should also not forget there is no rational alternative to the peaceful co-existence of Palestinians and Israelis in two states. This is in the interests of people on both sides."

"The German government will provide whatever assistance it can towards this," she said as the death toll in Gaza climbed above 360 after four days of Israeli airstrikes prompted by Hamas missile attacks on the Jewish state.

Turning to the global economy, Merkel said it had been plunged into crisis by financial excess carried out without social responsibility and a loss of a sense of proportion by many bankers and managers.

"The world has lived above its means," she said, adding that "only once we recognize these causes can we extricate the world from this crisis. To do this we need a clear set of principles."

These, she said, had to cover greater social responsibility in business and financial dealings and recognition that the state is "the guardian of economic and social order."

"These principles have to be adhered to across the world," Merkel said. "Only then will it be able to overcome the crisis. The world is currently learning this lesson."

The chancellor also outlined the steps her government was taking to pull the German economy out of recession and ensure that current jobs are made secure and new ones created.

"First of all we need to make sure that our businesses have access to the necessary credit. The state will have to jump in if banks do not live up to their responsibilities."

The government set up a 480-billion-euro (560 billion dollars) fund in October to ease the liquidity problems of financial institutes caught up in the global credit squeeze.

But there have been complaints that banks are not taking sufficient advantage of the scheme and the government wants more of them to do so and ease credit restrictions for small- and medium-sized firms.

Merkel also promised increased investment in education and infrastructure projects as well as extending high-speed internet connections to rural areas.

The measures form part of an economic stimulus package the government plans to unveil in January on the heels of another 32-billion-euro package announced earlier this month.

Merkel, who faces a general election in September, said she would meet regularly with business and political leaders to discuss how the measures were taking effect. (dpa)