Hillary Clinton: "I want to see both sides begin as soon as possible in negotiations"
US Secretary of State Hillary Clinton has urged the Israelis and Palestinians to restart talks "as soon as possible".
She was speaking after meeting Israeli PM Benjamin Netanyahu in Jerusalem, in a new US drive to restart the region's peace process.
Palestinians said Israel must freeze settlement building in the occupied territories before talks can resume.
But Mr Netanyahu said this was a "pretext and an obstacle" to prevent the renewal of negotiations.
At Saturday night's news conference with America's top diplomat, the Israeli premier called for the talks to restart "immediately".
He said the Palestinians had never before put forward a precondition for peace talks linked to the settlements issue.
By Jeremy Bowen, Middle East editor
Making peace in the Middle East is a top foreign policy priority for President Obama, but in his first nine months in office he has had a crash course in the reasons why every attempt to make peace between Israel and the Palestinians has failed.
So far the Obama administration's Middle East peace initiative hasn't even managed to get the two sides around a table. More than that, attempts by President Abbas to co-operate with the Americans have damaged him at home.
The rising tension has led to violence between Israelis and Palestinians in Jerusalem. No-one expected it to be quick or easy for President Obama in the Middle East. But he needs diplomatic progress, because the absence of hope in the region tends to lead to bloodshed.
Mrs Clinton agreed, adding: "What the prime minister [Netanyahu] has offered in specifics on restraints on a policy of settlements... is unprecedented in the context of prior to negotiations."
"I want to see both sides begin as soon as possible in negotiations," she said.
Earlier in day, Mrs Clinton met Palestinian Authority President Mahmoud Abbas in Abu Dhabi.
Those talks were described as "frank and difficult" by chief Palestinian negotiator Saeb Erakat.
Mr Abbas told journalists later: "Israel should honour its obligations especially with regards to the total halt on the settlements," AFP news agency reported.
When Mr Netanyahu took office seven months ago, the Obama administration called on Israel to halt all settlement building.
But following Israeli objections, Washington said the most important thing was to get the negotiations going again.
The BBC's Paul Wood in Jerusalem says that on the issue of settlements, quite simply the Obama administration blinked first.
The Palestinian refusal to acquiesce in this means the chances are slimmer than ever that these talks about talks can be turned into substantive negotiations, he adds.
The Palestinians feel angry and let down by the Obama adminstration, according to our correspondent.
They refused a direct appeal from Mrs Clinton to enter substantive talks immediately and the final status negotiations remain a long, long way off.
Mrs Clinton's Middle East trip comes 10 days after she reported back to President Barack Obama on the peace process, suggesting it was too early to launch fully-fledged talks.
Hillary Clinton urged peace talks towards a two-state solution
BBC state department correspondent Kim Ghattas, who is travelling with Mrs Clinton, says these talks appear designed mostly to make sure things at least do not slide backwards.
Visits by the Middle East special envoy George Mitchell have so far failed to produce any tangible action by either side.
Speaking to the BBC earlier, Mrs Clinton said a peace agreement between Israel and the Palestinians was key.
She said: "The fact that I'm in the region... reinforces the seriousness with which we are approaching our desire to get the parties to begin a serious negotiation that can lead to a two-state solution."
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