Kerry 'confident' of Israel-Palestinian talks progress
US Secretary of State John Kerry says he remains optimistic that tensions and difficulties can be overcome in the Middle East peace process.
Any negotiations have "moments of up and moments of down", he said after holding separate talks with the Israeli and Palestinian leaderships.
Mr Kerry reaffirmed Washington's rejection of Israeli settlement activity as "illegitimate".
The direct talks launched in July have shown little sign of progress.
John Kerry is trying hard to get the Palestinians and Israelis to stick to the negotiations they agreed to pursue for nine months.
As often in the past, Israel's continued construction in settlements on occupied territory has emerged as a key source of tension.
President Mahmoud Abbas has been criticised at home for continuing the negotiations while settlement construction goes on. Palestinians say the settlements undermine the future of a Palestinian state.
Israel says it never agreed to a freeze during the talks and points out it has been releasing Palestinian prisoners as a goodwill gesture.
Mr Kerry tried to ease the pressure on Mr Abbas by reiterating the US position that settlements are illegitimate. He then stated that the Palestinians had never agreed to condone continued construction during the negotiations but were aware building would continue.
But Mr Kerry said it was best if settlement construction was limited.
And that's part of the problem - perception of what "limited" actually means differs depending on whether you're an Israeli or a Palestinian. Earlier in the day, the Israeli prime minister had accused the Palestinians of incitement and of creating artificial crisis.
Mr Kerry said: "We need the space to negotiate privately, secretly, quietly and we will continue to do that.
"We have six months ahead of us on the timetable we have set for ourselves and I am confident we have the ability to make progress."
Mr Kerry said he had had a "very, very good meeting" with Palestinian Authority President Mahmoud Abbas.
This time there has been rising Palestinian anger at a perceived acquiescence to Israeli settlements as part of a deal to returning to talks.
"I want to make it extremely clear that at no time did the Palestinians in any way agree, as a matter of going back to the talks, that they could somehow condone or accept the settlements," Mr Kerry said.
A previous round of negotiations collapsed in September 2010 in a bitter row over Israeli settlements.'Artificial crises'
After separate talks with Benjamin Netanyahu, the Israeli Prime Minister said Israel stood by the terms agreed for the talks.
"I'm concerned about their progress because I see the Palestinians continuing with incitement, continuing to create artificial crises, continuing to avoid, run away from the historic decisions that are needed to make a genuine peace," he said.
On Tuesday, some Israeli media reported that Israeli negotiators had told their Palestinian counterparts that the barrier built by Israel in and around the occupied West Bank should serve as the border of a future Palestinian state.
- Palestinian team leaders: Saeb Erekat and Muhammed Shtayyeh
- Israeli team leaders: Tzipi Livni and Isaac Molcho
- US mediators: Martin Indyk and Frank Lowenstein
- Key issues: Status of Jerusalem; borders; security arrangements; settlements and possible land swaps; Palestinian refugees
And on Sunday, the Maariv newspaper carried a report saying Israel would build a security fence in the Jordan Valley, along the border with Jordan - a claim denounced by the Palestinians.
Mr Abbas also told a meeting of his Fatah movement that the negotiations with Israel had not made any progress so far, according to the Maan news agency.
For his part, Mr Kerry told the Israeli prime minister that, despite such reports, he was confident a deal could be reached.
Mr Kerry is pursuing an agreement based on a "two-state solution" that envisages Israel and a Palestinian state - consisting of the West Bank and the Gaza Strip - existing alongside each other.
He has previously said that all "final-status" issues - Jerusalem, borders, security arrangements, Jewish settlements and Palestinian refugees - are on the table.
The negotiating sessions have been held in secret locations and at undisclosed times as part of a US-requested media blackout. But both sides have voiced frustration at a lack of progress on core issues.
The secretary of state has denied media speculation that he may propose a new interim peace deal.
Mr Netanyahu wants Palestinian recognition of Israel as a Jewish state as a priority, whereas the Palestinians say borders and security top their agenda.
The Palestinians want their state to include all land captured by Israel in 1967, but some 500,000 Jews now live in more than 200 settlements and outposts in the West Bank including East Jerusalem. The settlements are considered illegal under international law, though Israel disputes this.
However, Mr Netanyahu has rejected any return to the pre-1967 ceasefire lines as "indefensible", saying it would not take into account the "demographic changes on the ground".
Mutually-agreed land swaps have been discussed in previous talks as a way to overcome this problem.