President Shimon Peres called on Israel and Turkey to resolve their dispute over last year's Israel Navy raid on a Turkish ship that was attempting to break the Israeli blockade of Gaza.

The two countries held talks Tuesday in New York in an effort to find a formula acceptable to both sides.

"Major efforts should be made to bring about reconciliation with Turkey," Peres told Haaretz on Tuesday.

The president underlined the importance of normalizing relations now.

Negotiating teams from the two countries are attempting to reach a compromise before the release tomorrow of the report of a United Nations investigative panel into the flotilla incident last May in which nine Turkish passengers were killed. The report is expected to be highly critical of both Turkey and Israel.

The Turks are concerned over the criticism and are seeking to get Israel's consent to a softening of the report as part of an arrangement that would put an end to the crisis between the two countries. American officials are also involved in the talks and are urging the parties to demonstrate flexibility.

Turkey has insisted on an apology from Israel for the deadly raid. Jerusalem has opposed issuing an apology, only agreeing to express regret over the incident.

Turkish relations initially soured following Israel's Cast Lead operation in Gaza at the end of 2008 and the beginning of 2009 and worsened with the confrontation between the Israeli Navy and the Mavi Marmara, one of the ships in the Gaza-bound flotilla.

For his part, Peres said he believed a compromise formula could be found to defuse the tensions and enable the countries to reestablish warm relations.