Steffen Seibert said in a statement that Merkel called Netanyahu to tell him "it is now necessary to dispel those doubts."
Seibert said Merkel told Netanyahu it is important to start negotiations "as soon as possible" on a two-state solution and that in the meantime both sides must refrain from "provocative acts."
Germany enjoys close relations with both Israel and the Palestinians, and has been frequently involved in acting as a neutral party to help negotiations between the two sides.
Merkel has also been a strong supporter of the need for a negotiated two-state solution.
But in the latest setback, Israel announced Tuesday that it has approved the new construction in the Jewish neighborhood of Gilo in southeast Jerusalem. The Palestinians condemned the plan, and the U.S., European Union and United Nations all swiftly expressed their disappointment over the settlements, which raised already heightened tensions after last week's Palestinian move to seek U.N. membership.
The Palestinians have demanded that Israel halt all settlement construction in east Jerusalem, which the Palestinians claim as their future capital, and the adjacent West Bank — territories captured by Israel in the 1967 Mideast war — as a condition for resuming peace talks.
Since capturing east Jerusalem, Israel has annexed the area and ringed it with about 10 Jewish enclaves that are meant to solidify its control. Gilo, which is close to the Palestinian city of Bethlehem, is among the largest, with about 50,000 residents. Israel's annexation of east Jerusalem has not been internationally recognized.
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