BERLIN - The Israeli and Palestinian leaders are likely to hold their first meeting in the coming weeks, both sides indicated Wednesday, in what would be an important step toward a formal resumption of peace talks and a signal achievement for President Barack Obama.

The indications came as Israeli Prime Minister Benjamin Netanyahu held four hours of talks with Obama's Mideast envoy, George Mitchell, in London on Wednesday. Mitchell has been pressing Israel to halt construction of West Bank settlements as a confidence-building gesture toward the Palestinians, and the issue has turned into an unusually public disagreement between the two allies.

Mahmoud Abbas, the Palestinian president, has said he would not resume peace talks until Israel freezes settlements, and reiterated that position in a speech Wednesday. But the Israelis have been strongly hinting that Netanyahu could meet Abbas next month at the U.N. General Assembly, and on Wednesday, Palestinian officials in the West Bank said for the first time that such a meeting was likely.

The officials said that while Abbas is prepared to talk to Netanyahu, he would not officially reopen negotiations until Israel halts its settlement activities. They spoke on condition of anonymity because nothing has been formally scheduled.

A first meeting between the two leaders, even if it did not include substantive talks, would be an important symbolic step toward the reopening of negotiations that have been suspended since shortly before Netanyahu took office in March.

Israel and the U.S. have been hinting that they are close to an agreement that would allow the resumption of peace talks. But in a joint statement released by the State Department in Washington after the meeting between Netanyahu and Mitchell, the two men said only that they had "made good progress" in talks and that they "agreed on the importance of restarting meaningful negotiations."

Speaking to reporters later in the day in Berlin, the next stop on Netanyahu's four-day trip to Europe, the Israeli leader said he and Mitchell had made "certain progress."

"There were discussions that moved us ahead in the process, but there are still issues that haven't been agreed upon," Netanyahu said.

Netanyahu has said he wants a compromise that would allow Israel to continue with some settlement construction while at the same time restarting peace talks with the Palestinians.

It is unclear what sort of compromise would be acceptable to the Americans or to the Palestinians. Netanyahu said his representatives would be meeting with Mitchell in the U.S. next week and that the U.S. envoy was due back in Israel within several weeks.

The Palestinians and the international community consider settlements to be obstacles to peace. Some 300,000 Israelis now live in West Bank settlements, in addition to 180,000 Israelis living in Jewish neighbourhoods in east Jerusalem. The Palestinians claim both areas, captured by Israel in the 1967 Mideast war, as parts of a future independent state.

Netanyahu has said he sees the spotlight on settlements as unfair and insisted the Mideast conflict is rooted in a deep Arab enmity toward Israel that predates them. Israeli officials say Netanyahu expects the Arab world to make goodwill gestures to Israel in exchange for a settlement freeze.

The subject of settlements was also sure to be raised at his meeting with German Chancellor Angela Merkel on Thursday.

German government spokesman Klaus Vater said that Berlin backs a two-state solution and, pending that, advocates that "no further settlements be built in the occupied areas."

A poll released Wednesday in Israel showed freezing settlements would be an unpopular move. Almost two-thirds of those questioned told pollsters they opposed a freeze, even in return for moves by Arab countries toward normalization of ties with Israel. Thirty-nine per cent said they would support a freeze in return for Arab gestures.

Conducted by the Maagar Mohot polling company, the survey questioned 506 Jewish Israelis and had a margin of error of 4.5 percentage points.

The issue has come to overshadow Israel's ties with the U.S and much of the international community since Netanyahu took power with a hardline government and Obama indicated that years of reluctant U.S. tolerance for settlement construction had ended.


Associated Press writer Mohammed Daraghmeh in Ramallah, West Bank contributed to this story.

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