The leaders of Brazil and Germany have expressed confidence Argentina will overcome its financial crisis. The comments were made Thursday in the Brazilian capital following talks between German Chancellor Gerhard Schroeder and Brazilian President Fernando Henrique Cardoso.

Chancellor Schroeder and President Cardoso met Thursday in Brasilia to discuss issues ranging from trade to peace in the Middle East, and the situation in Argentina.

Mr. Schroeder told reporters Germany will support an agreement between Argentina and the International Monetary Fund. But he said such an accord will depend on the Argentine government's ability to come up with an economic reform plan that is, as he put it, viable and sustainable. For his part, President Cardoso expressed confidence that Argentina has the resources to recover from the crisis.

The government of President Eduardo Duhalde, which took office at the beginning of the year following the resignations of two Presidents in December, is seeking more than $15 billion in new loans from the IMF. The Duhalde government has devalued the country's currency, presented a budget calling for spending cuts, and taken other measures to help pull Argentina out of its nearly four-year recession.

Chancellor Schroeder, who is on a Latin American tour, travels to Argentina late Thursday. He will be the first foreign leader to meet in Buenos Aires with Mr. Duhalde.

While in Brasilia, Mr. Schroeder and President Cardoso agreed to strengthen ties between their two nations, and to work together to reduce trade barriers.

During a luncheon toast, Mr. Cardoso said they also agreed to press forward on negotiations to establish a free trade accord between the European Union and the four-nation Mercosur trade bloc which includes Brazil and Argentina.

Germany's engagement in these negotiations is crucial for the conclusion of this agreement, which is so important to our countries and regions, he said. Mr. Cardoso went on to say there are now more promising conditions for reaching an accord, now that economic and political differences within Mercosur no longer exist.

Mr. Cardoso was indirectly referring to disputes that had arisen between Brazil and Argentina last year over the future viability of Mercosur when the government of Argentine President Fernando de la Rua was in power.

Mercosur leaders will meet in Madrid in May with the leaders of the EU to discuss a future free trade agreement between the two blocs.