US President Barack Obama called on NATO member states and Washington's European allies to do more in the fight against Islamic State, which he described as the most urgent threat facing the world.

In a wide-reaching speech in the northern German city of Hanover on Monday, Obama said those battling the terrorist network continue to make progress.

But he said the group is still "the most urgent threat," confirming that he had approved the deployment of an additional 250 US troops to Syria to support local forces in battling the radical Islamic group.

"We are not immune from barbaric terrorists," he said.

The additional US troops "are not going to lead the fight on the ground but help in assisting local forces in pushing IS back," Obama said.

The president's speech formed part of a two-day visit to Hanover where he joined German Chancellor Angela Merkel in opening the city's industrial fair, which the two leaders used as a platform to step up their campaign for a controversial US-European Union trade deal.

In his speech Obama said the international community was "not going to give up political initiative" to end what he described as "the suffering in Syria."

But he added: "We cannot solve this fight by ourselves. We need to do everything to stop them," calling on US allies to contribute more military trainers and to boost economic support for Syria and Iraq.

Obama criticized, however, several NATO member states for failing to share the burden of helping to finance the alliance. "Europe has been complacent in its own defence," he said.

The president is to join Merkel and the leaders of Britain, Italy and France at a mini-summit later on Monday in Hanover to discuss key global security issues, including Syria, Libya and the containment of a more assertive Russia.

The president had harsh words for Moscow accusing it of bullying in international affairs and saying it had emerged as a source of concern for NATO member states that were once part of the Soviet bloc, such as Poland and the three Baltic states – Estonia, Lithuania and Latvia.

Russia has to recognize that "true greatness" does not come from bullying but from working together, the president said.

He went on say that international sanctions against Russia would remain in place until the Kremlin implements the Minsk agreement, which calls for a ceasefire in eastern Ukraine and more autonomy in the region.

Obama reminded both Russia and NATO member states that the alliance's central mission was "to bolster the defence of our frontline allies."

The president also had a strong message for Europe saying that strength came through unity, describing the European Union as "one of the greatest political and economic achievements of modern times."

"The US and the entire world need a strong, prosperous and united Europe," Obama told his audience.

With just nine months to go before he leaves the White House, Obama also clearly has his eye on his political legacy, using the speech to sum up achievements of his two terms as president, including his healthcare reform.

But Obama has also began to cast around for projects once he leaves office.

"Once I'm out of office I'm going to have some time to start designing things," Obama joked during a tour earlier in the day of the Hanover trade fair, where the US is sponsor nation for the first time.

A golfing enthusiast, Obama also said he plans to teach Merkel, an avid hiker and cross-country skier, how to play golf.

But his real wish was to come back to Germany for the annual beer festival, Oktoberfest.

"I have never been to Oktoberfest," Obama said. "I suspect it's more fun when you're not president."

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