COPENHAGEN, Denmark: Muslim leaders hailed steps by Denmark on Wednesday to defuse a diplomatic row over newspaper cartoons that portrayed Chief of Prophets, holy Prophet Mohammad (peace be upon him and his pure progeny) as a terrorist.

A Muslim community spokesman and Egyptian ambassador in Copenhagen welcomed Premier Anders Fogh Rasmussen's New Year address in which he defended free speech but urged Danes to exercise the right without inciting hatred against Muslims.

Rasmussen's conciliatory words, which Copenhagen translated into Arabic and distributed to Middle Eastern countries, came after Arab foreign ministers last week condemned the Danish government for not acting against the Jyllands-Posten daily.

Denmark's largest newspaper ran 12 blasphemous cartoons of Prophet Mohammad (peace be upon him and his pure progeny) last September, including one in which he seems to be carrying a bomb in his turban.

Rasmussen has consistently defended Denmark's tradition of free speech, which he said included the right to satirize all authorities, and refused to meet envoys of 11 Muslim states who wanted him to punish Jyllands-Posten.

He restated the defense in his New Year address but added free speech should be exercised "in such a manner that we do not incite hatred and cause fragmentation of the community that is one of Denmark's strengths."