BRUSSELS, Nov 5: European Union leaders who met for summit talks on Friday, launched new efforts to rebuild their tattered relationship with the US but old rifts over Iraq remain hurdle in mending transatlantic ties.

"The US and the EU are natural and indispensable partners," said the 25-nation bloc in a joint statement clearly aimed at striking a more amicable relationship with the re-elected US President George W. Bush after two years of unprecedented acrimony over the Iraq war.

Making it clear that most of his EU counterparts had been hoping that Democratic Party candidate John Kerry would win the polls, British Prime Minister Tony Blair called on EU leaders to "come to terms" with Bush's re-election.

"President Bush is there for four years. In a way some people are in a sort of state of denial," said Blair in an interview with The Times newspaper. German European Commission member, Gunter Verheugen, agreed, saying: "It makes no sense for the Europeans to sit sulking in the corner for the next four years."

French President Jacques Chirac, who with German Chancellor Gerhard Schroeder led European opposition to the Iraq war, said the EU needed to be strong, united and dynamic to face up to the world's sole superpower.

But behind the public words of congratulations, the bloc's policymakers said it was now up to the new team in Washington to stop hostile Euro-bashing and start treating the 25-nation bloc as equal partner and ally.

"This is an opportunity for a new start," said an EU diplomat while EU foreign and security policy chief Javier Solana appealed for the two sides to establish a "spirit of true partnership."

Europe's main hope now is that Bush will appoint new cabinet members who are less anti-European and will not, like Defence Secretary Donald Rumsfeld, try and "cherry pick" among EU states or make unpleasant comparisons between anti-American "old" Europe and more pro-US "new" members of the club. However, mending transatlantic fault lines will take time and effort. Still topping the agenda of quarrels needing to be resolved is acrimony over the US-led war on Iraq.

Washington's invasion of Baghdad was opposed by a majority of Europeans and the governments of Germany, France and Belgium. Britain, Italy, Spain (under its former government) and Poland all backed the war.

Berlin and Paris are still unwilling to send troops - NATO or their own national forces - to help stabilize Iraq and remain reluctant to become too involved in the country's reconstruction.

French and German tempers flared over Iraq again after interim Iraqi Prime Minister Iyad Allawi this week did some undiplomatic finger-pointing Paris and Berlin, saying European nations which had been "content to have a spectator role" during the war must now get off the sidelines and help rebuild his country.

Schroeder met Allawi alone to criticize the Iraqi Premier's comments while France's Chirac left the summit early to attend the funeral of United Arab Emirates President Sheikh Zayed.

Chirac's departure was widely interpreted as a snub to the visiting Iraqi leader. "Mr Allawi sometimes makes more or less interesting statements," said Chirac in parting remarks to reporters. But diplomats described him as also being furious over Allawi's implied jibe that Paris and Berlin are not pulling their weight.

EU leaders have offered Allawi a modest 30 million euros in support for Iraqi elections planned in January. He is also being promised a first-ever trade pact with the EU and help in training police and judges.

Apart from Iraq, EU policymakers are adamant that the US administration must also start paying more attention in de-escalating Israeli-Palestinian violence. Convinced that there can be no progress in implementing the internationally-agreed peace roadmap without strong pressure from the US, EU officials including chief diplomat Solana are urging Washington to become more actively involved in the Middle East.

On other sources of friction, EU policymakers expect no change in US opposition to the Kyoto Protocol on global warming or in America's hostility to the International Criminal Court. And Bush, the second time around, is expected to run a tough trade policy, leading to further strains with Europe on an array of issues including genetically modified foods and subsidies to civilian aircraft.