Germany's Chancellor Olaf Scholz urged Israel to refrain from retaliating against Iran and focus on diplomacy to isolate Iran in the region.

Speaking to reporters in Brussels, ahead of an EU leaders' summit, Scholz said they will be discussing the latest developments in the Middle East, and diplomatic efforts to prevent a wider conflict in the region.

"It is good that Israel, together with friends and allies, and by its powerful air defense force, was largely able to fend off this attack so that the damage remained very limited," Scholz said.

"For us, it is important that this moment is now used for further de-escalation and that Israel also uses this success to strengthen its own position in the whole region, and does not respond with a massive attack of its own," he added.

Chancellor Scholz said this view was shared by many other partners and allies, and also "well understood" by everyone.

Asked whether the EU would introduce new sanctions against Iran and the Revolutionary Guards, Scholz said these would be among the topics discussed by the leaders.

"We have already taken a lot of steps and imposed sanctions against Iran, these have to be discussed again and again to see what further steps could be possible," he said.

Scholz underlined that some proposals for expanding sanctions were tied to legal procedures and judgments, and said they would wait for a legal assessment of the EU Commission before taking a decision.

Earlier on Wednesday, German Foreign Minister Annalena Baerbock held high-level talks in Tel Aviv and called on Israeli authorities to act "prudently and responsibly" to prevent a wider conflict in the Middle East.

"As the EU, we have already imposed massive sanctions on Iran, and we are continuing to work on this. At the same time, it is now crucial that this highly dangerous situation does not escalate into a regional conflagration," she said.

Israel's major allies, including the U.S. and the U.K., have stepped up their diplomatic efforts this week to persuade Tel Aviv to hold off on a major retaliatory strike, in a bid to avert a regional conflagration.

Iran launched an airborne attack on Israel on Saturday in retaliation for an April 1 airstrike on its diplomatic compound in the Syrian capital. It is said to have fired more than 300 drones and missiles, with almost all intercepted by the air defense systems of Israel and its allies - the U.S., France, and the U.K.