Powell held talks with his Spanish counterpart Ana Palacio
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American Secretary of State Colin Powell has urged Israelis and Palestinians to put aside their differences and start work on the "roadmap" for peace drafted by foreign mediators.
Mr Powell - who is in Madrid at the start of a visit to Europe and the Middle East - said both sides now had the necessary tools to move forward.
He added that Palestinian attacks and Israeli military retaliation should not "contaminate" the peace process.
Mr Powell was speaking after 12 Palestinians died in an overnight Israeli raid into Gaza City, and a suicide bomber killed three Israelis in Tel Aviv on Wednesday.
"We've got to get beyond this period of suicide bombings and retaliatory actions... to end the violence and to protect one's society," Mr Powell told a news briefing after a meeting his Spanish counterpart, Ana Palacio.
Mr Powell is visiting Spain and Albania before going to Syria and Lebanon on Saturday.
About 15 Palestinians were wounded in the Gaza raid
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The BBC's Jonathan Charles in Madrid says the secretary of state believes there has never been a better chance to kick-start this process.
The removal of Saddam Hussein in Iraq, Mr Powell says, has changed the dynamics in the region.
The "roadmap", leading to a Palestinian state as early as 2005, initially requires Palestinians to crack down on militants and the Israelis to start removing their restrictions on Palestinian life.
Doubts
However, the start of Mr Powell's tour has been overshadowed by renewed violence in the Middle East.
Three Hamas militants and three children were among the Palestinians killed in an Israeli incursion into Gaza City early on Thursday, according to Palestinian doctors.
Leading Hamas member Yusef Abu Hein - the main target of the raid - and two of his brothers are thought to have died in the raid.
Israeli troops backed by tanks and helicopter gunships surrounded a house where Hein's family live, and a gun battle ensued when he and his brothers refused to give themselves up.
Wednesday's suicide bombing occurred outside a cafe in Tel Aviv
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According to witnesses, the Israeli troops finally blew up the house, killing those inside.
Two 13-year-old boys and a two-year-old Palestinian child also died during the fighting, doctors said.
The child's father said he and his children had been huddled in their house trying to shelter from the automatic weapons fire and tank shell explosions, but Amir, attracted by the noise, wandered over to the window.
Before his father was able to reach him he was shot in the head.
"I could not help him," Mr Ayyad said, choking back tears at the local morgue, where his son's tiny body lay.
A leading Palestinian figure, Saeb Erekat, said Israel was using tanks to respond to the publication of the "roadmap".
However, the Israeli army said the operation was aimed at what it called "the terrorist infrastructure" in Gaza.
The BBC's James Rodgers in Gaza says the timing of the raid is likely to reinforce Palestinian doubts that the latest Middle East peace plan can succeed.