"As a friend, I say to you that Israel's security depends on stopping the settlements," Sarkozy told Peres.

"Israel's best security guarantee was the creation of a modern, democratic and viable Palestine state before the end of 2008," according to French president's spokesman David Martinon.

France is home to about 600,000 Jews, the largest community in western Europe. The country is also home to the region's largest Muslim population of over 5 million.

During his visit, Peres, on the occasion of his country's 60th anniversary since creation, will also officially inaugurate the 2008 edition of the world renowned Paris Book Fair on Thursday ahead of its public opening on Friday.

The event has attracted a lot of great controversy with many Arab and Muslim countries as well as writers and publishers vowing to boycott it to protest against the fact that Israel has been designated as this year's guest of honor.

Meanwhile, at the Champs-Elysees, Israeli flags were lined with the street, a symbol of France gushing welcome to the Israeli president.

As what Martinon has said, Sarkozy "conferred this honor to his Israeli counterpart to reaffirm the strength of the friendship between our two countries and people."