Waving cheerfully and sometimes blowing kisses to the cheering crowd, Francis kept going in his pope mobile past the edge of the square and halfway down the Rome boulevard that leads from the Vatican to the Tiber River before turning back. The route took him past cafes, souvenir shops and a hotel popular with pilgrims.
Francis also embraced Paul Bhatti, a speaker at the rally. His brother Shahbaz, a Pakistani government minister, was assassinated in 2011 after urging reform of a blasphemy law in Pakistan that had targeted Christians.
Earlier in the day, Merkel spoke privately for 45 minutes with the pope at the Apostolic Palace.
Her Christian Democrat party depends heavily on support from Protestant and Catholic voters in Germany, and the chat and photo opportunity could be a welcome campaign boost for a leader largely identified by Europe's economically suffering citizens as a champion of debt reduction, including painful austerity across much of the continent.
For its part, the Vatican is eager for allies in its campaign to anchor European societies more solidly in their heritage of Christian roots. The church also seeks support on behalf of Christians who face persecution in the world.
The suffering of Europeans caught in the continent's grip of joblessness and other economic woes also dominated the pope's concerns. On Thursday, Francis blasted what he called a "cult of money" in a global financial system that ends up tyrannizing, not helping, the world's poor.
"It's not just an economic crisis," but an existential problem depressing morale, Francis told the rally. "It's a deep crisis. We just cannot worry about ourselves ... close ourselves in a sense of helplessness."
The pontiff urged people to help the needy, especially on the margins of societies.
Merkel, asked by reporters about the pope's scathing criticism of the global financial system, said they spoke about regulation of financial markets.
"The regulation of the financial markets is our central problem, our central task," Merkel said. "We are moving ahead, but we are not yet where we want to be, where we could say that a derailment of the guard rails of social market won't happen again."
Merkel added: "It ought to be like this: The economy is there to serve the people. In the last few years, this hasn't been the case at all everywhere."
Italy, Spain, Ireland, Portugal and especially Greece have seen governments concentrate on debt reduction while slashing state spending. With growth stymied, unemployment, especially among young people, has soared. Businesses, many of them family-run in southern Europe, have failed as bank lending dried up.
The chancellor said the pope had stressed the world needs a strong and just Europe.
Merkel is campaigning for re-election in September's general election. Half of Germany's population is Catholic. In Bavaria there is a strong conservative and Catholic tradition.
According to a Vatican statement, Francis and Merkel also discussed "safeguarding human rights, the persecutions faced by Christians" and religious freedom.
"I see continuity in the missionary aspect, in becoming aware of the importance of Christianity for our Christian roots," said Merkel, adding that the "simple and touching words" of Francis, who was elected pontiff two months ago, are already reaching people.
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AP correspondent Kirsten Grieshaber contributed from Berlin.
-AP