By Julien Ponthus and John Irish
ALGIERS/PARIS (Reuters) - President Francois Hollande acknowledged on Thursday that France's colonization of Algeria had been "brutal and unfair" but stopped short of making an apology to the oil-rich North African state which Paris sees as a major trading partner.
With France's own economy spluttering, Hollande had hoped his visit would not only strengthen trade ties but improve security cooperation, as Paris pushes for intervention against Islamists who have seized control of northern Mali.
Algeria, which has 12 billion barrels of oil reserves, is geographically the world's largest Francophone nation, yet annual trade with its one-time colonial master is just 10 billion euros.
Hollande's comments on the 1954-1962 Algerian war, which ended in Algerian independence and France's withdrawal, are likely to be carefully analyzed for signs they could help remove lingering resentment about the conflict in both countries, a legacy that has held back a trading partnership which Paris hopes could revive the Mediterranean basin's economic fortunes.
"For 132 years, Algeria was subjected to a brutal and unfair system: colonization. I acknowledge the suffering it caused," Hollande told the Algerian parliament on the second day of his visit.
Seeking to strike a more conciliatory stance than his conservative predecessor Nicolas Sarkozy whom Algerians viewed as overly hostile towards their country because of what they regarded as his tough immigration policies, Hollande tried to take a nuanced approach.
"We respect the act of memory, of all the memories. There is a duty of truth on the violence, the injustices, the massacres and the torture," he said.
But the 58-year-old Hollande had limited room for maneuver.
A formal apology for France's colonial past is a sensitive issue. Many French citizens who lived there before independence and who fought in the French army against Algerian insurgents oppose the idea, as do former loyalist Muslim volunteers known as "harkis".
"I am not forgetting the French of Algeria," he said, calling on archives from both countries to be made available to reveal the truth of the era. He made no mention of the harkis.
In his previous role as Socialist party leader he had said in 2006 that France should apologize to the Algerian people, but on Thursday he appeared to go as far as he felt he could.
Algerian political analyst Farid Ferrahi said that Hollande's visit had been preceded by a lot of hype but had failed to deliver as much as it had promised.
"Normalizing relations with France won't get done with a single visit," Ferrahi said.
The speech came a day after Hollande was greeted by thousands of cheering Algerians on arrival in the Algerian capital. He called for an equal partnership between the two states but said he had not come "to repent or apologize".
Sarkozy had sought to review preferential visa arrangements from which thousands of Algerians benefit each year, a policy critics said served only to deepen resentment of France in immigrant-heavy suburbs.
One of Hollande's pledges was to break with Sarkozy's immigration and security policies, which were badly received by France's 5 million Muslims, many of whom are of Algerian origin.
Hollande said he wanted to make it easier for Algerians and French to travel between the two countries.
"Asking for a visa should not be full of obstacles nor a humiliation," he said.
Around 700,000 Algerians live in France and French authorities issue some 200,000 visas to Algerians each year.
Larbi Zouak, a columnist at Algerian daily El Khabar said "Hollande's speech shows that France is pursuing its economic interests. Nothing else."
Hollande, who brought with him senior executives from some of France's top firms, said Renault had agreed to build a factory to produce some 75,000 cars a year, although no other major contracts were signed during the visit.
As Algiers has diversified its economy, China, Spain and Italy have eroded France's market share.
"France and Algeria must enter a new era in which we increase our exchanges and investments," said Hollande. "We have to meet the challenge of unemployment, especially among the young."
(Additional reporting by Lamine Chikhi in Algiers; Editing by Mark John, Brian Love and Andrew Osborn)