Wen and Swiss President and Finance Minister Hans-Rudolf Merz also discussed the current global financial crisis as well as human rights and cooperation on science and technology, the Swiss federal government said in a statement.

The Chinese premier was on an official working visit on his way to attend the annual meeting of global political and business leaders in the Swiss resort of Davos on Wednesday.

On a tour also aimed at mending diplomatic relations with Europe, Wen is later due to head to Germany, the EU headquarters in Brussels, Spain and Britain, to discuss the worsening state of the world economy with European leaders.

The Swiss government said "significant progress" was made in identifying to causes of the financial crisis and on the need to improve regulation, during the bilateral talks.

The Swiss and Chinese also agreed to begin a joint feasability study in the second half of this year on a free trade agreement "with the aim of deciding on the start of negoitiations at the earliest opportunity."

The new bilateral investment deal, replacing one concluded in 1986, is meant to increase legal protection for Swiss investors in China and encourage more Chinese investment in Switzerland.

Police in the Swiss capital said they had detained 21 people for public highway offences during pro-Tibetan protests in the city on Tuesday. The protesters were later released.

Wen's European tour will bypass France after tensions arose over President Nicolas Sarkozy's meeting with the Dalai Lama in December -- although Beijing signalled last week it was ready to repair relations with Paris.

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