Merkel says Iran's demands on US sanctions 'unrealistic'
"I would naturally be happy if there were talks between the United States and Iran," she told reporters at the United Nations.
But she dismissed Iran's demands that the United States lift all its sanctions before any high-level talks can take place.
"I think that that's unrealistic," she said after separate talks with US President Donald Trump and Iranian President Hassan Rouhani.
Trump, addressing the General Assembly, threatened to impose even more sanctions on Iran after it was accused of carrying out an attack on Saudi Arabia's oil infrastructure.
Trump warned sanctions on Iran would be increased unless it ceases its "fanatical" weapons drive and "aggression" in the Middle East.
"Hoping to free itself from sanctions, the regime has escalated its violent and unprovoked aggression," Trump told the United Nations during its 74th General Assembly in New York.
Trump also criticised Tehran's "menacing behaviour" when addressing the 193 member states of the UN.
He encouraged all nations to combat Tehran's influence, saying "no responsible government should subsidise Iran's bloodlust".
The president showed no signs of loosening sanctions on the Islamic Republic.
"Hoping to free itself from sanctions, the regime has escalated its violent and unprovoked aggression," Trump told the United Nations General Assembly in New York.
"As long as Iran's menacing behaviour continues, sanctions will not be lifted - they will be tightened."
Trump accused Iran of "anti-Semitic behaviour" for its criticism of Israel and called on the loyalty of other nations in the region to battle "extremism".
Meanwhile, the leaders of France, Germany and Japan were all also meeting with both Rouhani and Trump at the United Nations in hopes of reviving diplomacy.
Tehran and Washington have been at loggerheads since May last year when Trump abandoned a 2015 nuclear deal and began reimposing sanctions on Iran in a campaign of "maximum pressure."
Following the Group of Seven summit in France in August, though, Trump spoke openly of his willingness to meet his Iranian counterpart face-to-face, if the conditions were right.
Trump is fond of the optics of high-profile meetings - his summits with North Korea's Kim Jong Un are testament to that - and a summit would mark a diplomatic coup a year ahead of his re-election bid.
He tempered his enthusiasm, though, after the devastating 14 September attacks on Saudi oil installations that Washington and Riyadh have, to varying degrees, blamed on Tehran.
The attacks heightened tensions and renewed fears of a military escalation in the region.
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