Syria is ready to hold peace talks with Israel, but is also preparing for the possibility of a war with the Jewish state, Syrian President Bashar Assad said, according to an interview published Friday in an Italian newspaper.

Assad called on Israeli Prime Minister Ehud Olmert to consider Syria's offer to discuss peace in exchange for territorial concessions, Rome-based daily La Repubblica reported.

"I say to Olmert: make an attempt. Call our bluff," he was quoted as saying. "The Syrian people are united on this: Reach peace to get back our lands," he said in a reference to the Israeli-occupied Golan Heights.

For complete coverage on tension in the mideast, click here.

A U.N. General Assembly resolution in September demanded that Israel withdraw from this territory, which it annexed from Syria in 1967. The United States opposes the resolution, contending that it prejudges the outcome of negotiations between Israel and Syria.

Despite his call for dialogue, Assad also said Syria expects that Israel could launch a war against it "at any moment," according to the interview.

"War is always possible in our region. It is natural to prepare (for it)," he was quoted as telling the newspaper. However, he dismissed as "inexact" recent reports that his country is massing missiles on the border with Israel, according to the interview.

Assad also sought to downplay Syria's backing of Hezbollah guerrillas in Lebanon, saying that his country holds influence on the Shiite group, but doesn't interfere in Lebanese affairs.

"Don't you see that Hezbollah is backed by a large part of the Lebanese population? It is wrong to portray it as a Syrian or Iranian puppet. Hezbollah has its own interests, its own vision. They trust us, so we can influence them," he was quoted as saying in the interview. "We never lost our influence in Lebanon. But it is not interference."

On Friday, European Union leaders at a summit in Brussels urged Syria to stop meddling in Lebanon and to help stabilize the country gripped for weeks by Hezbollah-led protests that have confined the Lebanese prime minister to his Beirut office.

For more coverage on Hezbollah, Israel and Syria, click here.