The Germany-based Siemens, one of the world's largest engineering groups, has pulled out of all new business dealings with Iran after pressure from the US and German governments The Guardian reported on Friday. The move followed the decision by Germany's three biggest banks, Deutsche, Commerzbank, and Dresdner, to leave Iran after US Vice-president Dick Cheney cautioned that if firms remain in Teheran, they are going to have trouble doing business in the US. The British newspaper quoted Siemens insiders as saying the group would carry out existing contracts in Iran which have attracted government export credit guarantees, but would seek no new contracts. The engineering group won a contract four years ago to supply 24 power stations to Iran and last year secured a provisional 450 million euro deal to supply 150 locomotives for Iran's railways. Officials said Siemens' Iranian business amounted to less than 1% of annual group turnover of 84billion last year. Germany is Iran's biggest trading partner, with a 2006 surplus of â‚¬4bn, but trade was down 18% in the first half of this year. German Chancellor Angela Merkel arrived Friday for an overnight visit at US President George Bush's remote central Texas ranch and Teheran's defiance of international demands that it halt its uranium enrichment program was a major topic of discussion. Russia and China - two of the five permanent members of the UN Security Council - are blocking the UN from moving toward a third set of harsher sanctions against Iran. Both Bush and Merkel emphasized that diplomatic efforts with Iran have not yet been exhausted. Bush dismissed a question about when patience with Iran would run out. "What the Iranian regime must understand is that we will continue to work together to solve this problem diplomatically, which means they will continue to be isolated," said Bush, who has recently warned that a nuclear-armed Iran could lead to World War III. Teheran says its uranium enrichment is for a civilian nuclear energy program, but the Western nations believe otherwise. Merkel said all members of the Security Council must be engaged on the issue and said that if talks with Teheran "do not yield any results, further steps will have to be made." "We need to think about further possible sanctions," she said through a translator, "and we do not only need to think about them but we need to talk and agree."