By Michelle Nichols

UNITED NATIONS (Reuters) - Violence and incitement, settlement expansion and a lack of control of Gaza by the Palestinian Authority are undermining hope for Middle East peace, a senior U.N. official said on Thursday, citing a report by the Middle East peace "Quartet".

U.N. Middle East envoy Nickolay Mladenov briefed the U.N. Security Council on an eagerly awaited report by the Quartet of sponsors of the stalled Middle East peace process: the United States, Russia, the European Union and the United Nations.

He said the report had been submitted to the Quartet members for final approval and was likely to be released on Friday.

"The main objective of this report is not about assigning blame," Mladenov told the 15-member council. "It focuses on the major threats to achieving a negotiated peace and offers recommendations on the way forward.

"The Quartet has outlined a reasonable set of steps that if implemented sincerely and resolutely, with support from the international community, could set Israelis and Palestinians on firmly along a navigable course towards establishing a comprehensive peace," he said, without elaborating further.

The Palestinians want an independent state in the West Bank, Gaza and East Jerusalem, areas Israel captured in a 1967 war. The last round of peace talks broke down in April 2014, and Israeli-Palestinian violence has surged in recent months.

On Thursday, a Palestinian fatally stabbed a 13-year-old Israeli girl in her bedroom in a settlement in the West Bank.

Mladenov said the Quartet report concluded that continuing violence, terrorism and incitement; Israeli settlement expansion and a lack of control of Gaza by the Palestinian Authority "severely undermine hope for peace."

"These negative trends can and must be urgently reversed in order to advance the two-state solution on ground," he said. "The report contains recommendations to both sides."

Israel has been expanding housing settlements on land Palestinians seek for a future state. The United Nations and most countries consider the settlements as illegal.

The Palestinian Authority headed by President Mahmoud Abbas is based in the West Bank, while Islamist group Hamas has been in control of Gaza since 2007.

Mladenov said he hoped the report would push the parties to engage constructively with the Quartet and that the text would be welcomed by the Security Council.

"It's up to the Security Council and the international community, on the basis of the report, to decide how they want to pursue the way forward," he said.

(Reporting by Michelle Nichols; Editing by Alistair Bell and Jonathan Oatis)