Israeli Prime Minister Benjamin Netanyahu and French President François Hollande will attend a memorial on Thursday for three children and a teacher killed by an Islamist gunman at a Jewish school.

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After spending Wednesday in Paris discussing Middle East peace and Iran's nuclear ambitions, the two leaders will pay their respects to the traumatised Jewish community in the southern French city of Toulouse.

On March 19 Mohamed Merah, a self-described Al-Qaeda sympathiser, shot and killed a rabbi, three Jewish schoolchildren and three French paratroopers in attacks in and around Toulouse before being shot dead in a police siege.

Last week French police unveiled a damning report that showed up several loopholes in an investigation of the Al-Qaeda-inspired gunman before his shooting spree.

The joint visit will send "a very strong message of unity against this menace which threatens all humanity," said Nicole Yardeni, president of the Council of French Jewish Institutions in the Midi-Pyrenees region.

Netanyahu's talks with Hollande in Paris on Wednesday were held in a "very good atmosphere," a top Israeli source told AFP.

Since taking office five months ago, Hollande has only spoken to Netanyahu by telephone but met Palestinian leader Mahmud Abbas twice.

The Israeli leader enjoyed close ties with Hollande's predecessor Nicolas Sarkozy but there was a chill after Sarkozy reportedly called Netanyahu a "liar" during a private conversation with US President Barack Obama.

France is home to between 350,000 and 500,000 Jews, according to estimates. Since the creation of Israel in 1948, more than 90,000 French Jews have settled there.

On Wednesday, Hollande recognised that anti-semitism existed in France and vowed to tackle the problem.

Netanyahu called on the Jewish community in France to appreciate the French government's efforts to counter anti-semitism.

The ceremony in Toulouse, due to get under way at 1:30 pm (1230 GMT), will bring Jewish schoolchildren, their parents and school staff together with other members of the Jewish community as well as Netanyahu and Hollande.

The Israeli prime minister will then meet with representatives of the Jewish community.

Exceptional security measures are in place in Toulouse for the Netanyahu's visit, including shutting down the Toulouse ring road as the two convoys move from the airport to the city's Roseraie district.

On Wednesday demonstrators in France held pro and anti-Netanyahu rallies.

In Paris, about 200 people gathered in front of the city's main opera house shouting anti-Netanyahu slogans and protesting at Israeli occupation but a similar number gathered at the Champs-Elysees shouting "Israel will live, Israel will win."

In Toulouse, on the eve of Netanyahu's visit, about 100 left-wing activists waving Palestinian flags protested against Israeli policies.

No such protests are expected on Thursday, so as not to disrupt the memorial ceremony.