Prime Minister Pedro Sanchez hosted his Iraqi counterpart in Madrid where they signed memorandums of understanding on "financial cooperation and justice", the Spanish government said in a statement.

Spanish trade organisations penned agreements on "industrial and business cooperation" with the aim of increasing Spain's business in Iraq in sectors such as defence, infrastructure, transport, food and water management, the statement added.

According to Spanish official data, the European country has a yawning trade deficit with Iraq.

Spain exported 206 million euros ($217 million) to Iraq in 2023, an 18-percent increase on the previous year, but Iraqi imports -- mostly oil -- totalled some 1.66 billion euros.

Sudani's office said a railway project worth 250 million euros was recently awarded to a Spanish company and that talks with another firm are underway for a high-speed train connection between Najaf and Karbala governorates.

The leaders discussed the war in Gaza and the fragile ceasefire in Lebanon.

Sanchez and Sudani urged "all parties" to act "with the greatest moderation, end the violence immediately and fully respect international law".

Sanchez also told Sudani that Spain, which contributes to a NATO mission and a US-led anti-jihadist coalition in Iraq, supported the Baghdad government's efforts to maintain "stability, security and sovereignty".