UPDATE 2-Afghans must talk to each other for peace, Obama says
* Obama makes first trip to Berlin as U.S. president
* Says Afghans must talk to each other
* Merkel warns on limits to surveillance
(Adds further quotes from Obama)
BERLIN, June 19 (Reuters) - U.S. President Barack Obama said on Wednesday Afghans must talk to each other to resolve the conflict in their country even though huge mistrust exists between the government and its Taliban foes.
Obama was speaking in Berlin a day after the United States said it would begin talks with the Taliban on Thursday to try to seek a negotiated peace to 12 years of war - a move that has deeply upset President Hamid Karzai's U.S.-backed government.
"We do think that ultimately we're going to need to see Afghans talking to Afghans about how they can move forward and end the cycle of violence there so they can start actually building their country," Obama said at a joint news conference in Berlin with German Chancellor Angela Merkel.
As a sign of displeasure with the move, Karzai has suspended talks with the United States on a troop agreement. But Obama said he welcomed Karzai's announcement that Afghan forces would soon take responsibility for security from the U.S.-led NATO peacekeeping force.
Obama arrived in Germany from a two-day summit with Group of Eight leaders in Northern Ireland and later on Wednesday will unveil plans for a sharp reduction in nuclear warheads in a speech at the Brandenburg Gate.
At the news conference, he also addressed the issue of a U.S. spying program dubbed Prism, saying he was confident his government has struck a balance intelligence gathering and civil liberties.
The Prism programme applied to specific leads on terrorism and weapons proliferation, he said.
"I came into office committed to protecting the American people but also committed to our values and our ideals and one of our highest ideals is civil liberties and privacy," Obama said.
Revelation of the programme has upset Germans wary of government surveillance after the trauma of the Nazi Gestapo and East German Stasi secret police. Chancellor Merkel told Obama that government monitoring of Internet communications needed to remain within proper limits.
"I made clear that although we do see the need for gathering information, the topic of proportionality is always an important one and the free democratic order is based on people feeling safe," Merkel said at the news conference.
Obama, on his first visit to the German capital as president, will make his Brandenburg Gate speech 50 years after John F. Kennedy declared "Ich bin ein Berliner" in a defiant Cold War address.
A senior U.S. administration official said Obama would signal his desire to cut deployed atomic weapons by up to one third below the level achieved in the last "New START" treaty with Russia.
"The U.S. intent is to seek negotiated cuts with Russia so that we can continue to move beyond Cold War nuclear postures," the official said.
The Democrat leader has forged a pragmatic - if not warm - relationship with conservative Chancellor Merkel, one of his closest European allies. Obama's trip gives her a boost just months before a German election.
(Editing by Angus MacSwan and Ralph Boulton)