Damascus  - French President Nicolas Sarkozy and his Syrian counterpart Bashar al-Assad held "frank and constructive" talks, both presidents said in a press conference held in Damascus Wednesday.

"We discussed many things but concentrated on peace in the Middle East," said al-Assad.

"Our main topic was the peace process and the indirect peace negotiations between Syria and Israel, where do the talks stand now and their future," the Syrian president said.

Sarkozy arrived in Syria earlier on Wednesday and was welcomed by Syrian Foreign Minister Walid al-Moallem and other officials at Damascus Airport.

The French president went immediately to the presidential palace for an official welcoming ceremony, followed by bilateral talks with al-Assad.

The visit, the first by a French head of state in four years, aims at normalizing bilateral relations, which were frozen after the assassination of Lebanon's former premier Rafiq Hariri in February 2005. Damascus was accused of being behind the car bombing, a claim it has denied.

Al-Assad expressed his happiness at the return of a European role, especially a French role, in the Middle East and the whole world.

The Syrian president said that the French-Syrian relations were boosted after his visit to Paris which took place last July.

"The two visits had boosted the bilateral relations, increased the trust between the two countries and strengthened the friendship that had already existed," said al-Assad.

Sarkozy said that the "frank talks" strengthened the understanding and trust between the two countries.

"I am glad to say that all the decisions announced by the Syrian president in Paris had all been accomplished, especially the Damascus-hosted summit with the Lebanese president," said Sarkozy.

Sarkozy said he hopes that such a "positive development" would continue, adding that France supports the indirect peace talks between Israel and Syria.

"Syria can play an important role in the Iranian file," said the French president.

While acknowledging Iran's right to have nuclear power, Sarkozy stressed that Iranian nuclear weapons would be a threat to the region and the whole world.

The presidents said they would talk more on the Iranian issue at a press conference on Thursday.

On Thursday, Sarkozy is scheduled to join a four-way summit on the Middle East peace process with al-Assad, Turkish Prime Minister Recep Tayyip Erdogan and the Emir of Qatar, Hamad bin Khalifa al-Thani.

As France holds the rotating presidency of the European Union, Sarkozy will be representing the bloc at the talks. Qatar brokered a deal last May to resolve Lebanon's political crisis, while Turkey has been mediating since May in indirect peace talks between Syria and Israel.

"Tomorrow's summit is a new phase in the peace process in the region," said Sarkozy.

Sarkozy is accompanied by Foreign Minister Bernard Kouchner and a high-level economic delegation which will meet with Syrian ministers and businessmen.

"I hope the economic relations between the two countries can be as strong as the political one," said Sarkozy.

Al-Assad said that a memorandum of understanding (MoU) will be signed Thursday.

Syrian sources told Deutsche Presse-Agentur dpa that the agreement will be on development and small loans, gas, oil, and electricity. Sources also said there will be cooperation between the private sectors in both countries.

"Our countries open a new chapter in their relations," Sarkozy told the Syrian al-Watan daily on the eve of his visit.

"Our friendship is a priceless fortune that should be preserved at any cost," he told the semi-official newspaper. (dpa)