Tripoli/Geneva  - Switzerland's President Hans-Rudolf Merz was ready Thursday to apologize to Libya for the arrest of leader Moamer Gaddafi's son last year, obtaining in return the release of two Swiss nationals, the Swiss government said.

The two countries also agreed to reestablish full diplomatic and trade relations. Switzerland would be ready to apologize for the "inappropriate and unnecessary arrest," the statement said.

Merz landed in Tripoli earlier in the day and met with Libyan Prime Minister al-Baghdadi al-Mahmoudi for closed-door talks.

Relations between Libya and Switzerland were strained after Hannibal Gaddafi and his pregnant wife were arrested in a hotel in Geneva last summer on charges of beating two domestic employees.

Police arrived at the scene after receiving a phone call from hotel workers who report the alleged abuse.

The arrest angered the Libyan leader's family, though the Geneva police force has insisted it acted properly. Swiss experts have said the matter could have been handled more sensitively but that the police did not commit any wrongdoing.

The couple, who left the country after their release from a short detention, denied harming the two maids from Tunisia and Morocco, though reports said a settlement was reached out of the limelight.

Switzerland had advised its citizens not to visit Libya because of the row, and the foreign ministry voiced concern at what it described as "alarming" retaliatory measures introduced by the Libyan leader in the wake of his son's detention.

Libya arrested Swiss citizens and refused to let two leave the country. They would be arriving back in Switzerland in the coming days, the statement from Bern announced.

Tripoli also demanded the closure of Swiss firms present in the country, among other measures. Trade between the countries collapsed, particularly Libyan oil exports to Switzerland, flight routes were canceled and Gaddafi withdrew funds from Swiss banks.

According to the bilateral agreement reached Thursday, an official from each foreign ministry would be appointed to aid the restoration of full relations between Libya and Switzerland.

The young Gaddafi has had two other run-ins with European police forces, in France and Italy. (dpa)