RAMALLAH, West Bank: A US envoy concluded talks with Palestinian and Israeli leaders Friday without agreement on how to keep alive peace negotiations that are on hold due to a dispute over Jewish settlement building. US envoy George Mitchell said Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas had agreed to keep talking indirectly. He has been shuttling between the leaders for two days. “Both the president and the prime minister have agreed that we will continue our discussions, ongoing in an effort to move forward in this process toward what we all share as a common goal: the establishment of comprehensive peace in the Middle East,” Mitchell told reporters in Ramallah. “There remain obstacles. Our determination continues,” he said. Earlier in Occupied Jerusalem, Netanyahu said: “We are making efforts together with Senator Mitchell to continue to hold the talks with President Abbas. We want the talks to continue.” Abbas says he will pull out of the talks unless Israel extends its 10-month freeze on new building in Jewish settlements in the occupied West Bank, which expired this week. Saeb Erekat, the chief Palestinian negotiator, said the United States would “continue in their bilateral efforts between us and the Israelis, each separately”. “The key to direct talks is in the hand of the Israeli prime minister. We hope that the Israeli leadership chooses peace and not settlement,” he said after Mitchell's meeting with Abbas. Mitchell said he would depart for Qatar, then Egypt and Jordan. Abbas has said he will take no final decision until the Arab League has discussed the issue. Netanyahu is refusing to extend the construction moratorium and Israeli reports said he had rebuffed a US offer of “very generous” incentives to persuade him to extend it by 60 days. One official quoted Netanyahu as telling his advisers that it was not easy to freeze construction for the past 10 months and that he had lived up to his commitments to the Palestinians, the US and the international community. “Now I expect the Palestinians to show some flexibility,” Netanyahu was quoted as saying. “Everyone knows that measured and restrained building in Judaea and Samaria in the coming year will have no influence on the peace map.” A US official denied reports that Obama sent Netanyahu a letter proposing security guarantees, including a continued Israeli troop presence in the Jordan Valley after the creation of a Palestinian state. But an Israeli official, who requested anonymity, confirmed that “the White House made an offer of incentives to Israel as described in the media but these were rejected by Netanyahu”. Israel's Yedioth Ahronoth daily said Obama had not signed off on the offer. The security proposals were floated in a paper drawn up last week by Israeli Defense Minister Ehud Barak and White House Middle East aide Dennis Ross, it said. It would have become a “presidential letter” only if Netanyahu had accepted. – Reuters P-1 Mitchell ends Mideast peace talks with no breakthrough* Indirect talks to continue * Netanyahu rejects US incentive * Abbas wants settlements freezed RAMALLAH, West Bank - A US envoy concluded talks with Palestinian and Israeli leaders Friday without agreement on how to keep alive peace negotiations that are on hold due to a dispute over Jewish settlement building. US envoy George Mitchell said Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas had agreed to keep talking indirectly. He has been shuttling between the leaders for two days. US President Barack Obama's drive to end the six-decade old conflict appeared to be faltering just a month after his administration launched the direct talks in Washington. “Both the president and the prime minister have agreed that we will continue our discussions, ongoing in an effort to move forward in this process toward what we all share as a common goal: the establishment of comprehensive peace in the Middle East,” Mitchell told reporters in Ramallah. “There remain obstacles. Our determination continues,” he said. Earlier in Occupied Jerusalem, Netanyahu said: “We are making efforts together with Senator Mitchell to continue to hold the talks with President Abbas. We want the talks to continue.” Abbas says he will pull out of the talks unless Israel extends its 10-month freeze on new building in Jewish settlements in the occupied West Bank, which expired this week. Palestinians say the growth of the settlements, on land Israel has occupied since 1967, will render impossible the establishment of a Palestinian state in the West Bank and Gaza Strip - the stated goal of the peace talks. Some 500,000 Jews live on territory where the Palestinians aim to establish their state with East Jerusalem as its capital. Saeb Erekat, the chief Palestinian negotiator, said the United States would “continue in their bilateral efforts between us and the Israelis, each separately”. “The key to direct talks is in the hand of the Israeli prime minister. We hope that the Israeli leadership chooses peace and not settlement,” he said after Mitchell's meeting with Abbas. Mitchell said he would depart for Qatar, then Egypt and Jordan. Abbas has said he will take no final decision until the Arab League has discussed the issue. There were indications on Friday that the Oct. 4 date for an Arab League consultation would be set back to Oct. 8 at the request of Egypt. European Union foreign affairs chief Catherine Ashton said after talks with the principals that major powers engaged in the process were “very concerned that the ending of the moratorium should not put at risk the possibility of long-term peace”. “I have urged Israel to continue the moratorium and allow the talks more time to make greater progress,” Ashton said. Netanyahu is refusing to extend the construction moratorium and Israeli reports said he had rebuffed a US offer of “very generous” incentives to persuade him to extend it by 60 days. One official quoted Netanyahu as telling his advisors that it was not easy to freeze construction for the past 10 months and that he had lived up to his commitments to the Palestinians, the United States and the international community. “Now I expect the Palestinians to show some flexibility,” Netanyahu was quoted as saying. “Everyone knows that measured and restrained building in Judaea and Samaria (the West Bank) in the coming year will have no influence on the peace map.” A US State Department official denied reports that Obama sent Netanyahu a letter proposing security guarantees, including a continued Israeli troop presence in the Jordan Valley after the creation of a Palestinian state. But an Israeli official, who requested anonymity, confirmed that “the White House made an offer of incentives to Israel as described in the media but these were rejected by Netanyahu”. Israel's Yedioth Ahronoth daily said Obama had not signed off on the offer. The security proposals were floated in a paper drawn up last week by Israeli Defense Minister Ehud Barak and White House Middle East aide Dennis Ross, it said. It would have become a “presidential letter” only if Netanyahu had accepted. - Reuters P-1 Mitchell ends Mideast peace talks with no breakthrough* Indirect talks to continue * Netanyahu rejects US incentive * Abbas wants settlements freezed RAMALLAH, West Bank - A US envoy concluded talks with Palestinian and Israeli leaders Friday without agreement on how to keep alive peace negotiations that are on hold due to a dispute over Jewish settlement building. US envoy George Mitchell said Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas had agreed to keep talking indirectly. He has been shuttling between the leaders for two days. US President Barack Obama's drive to end the six-decade old conflict appeared to be faltering just a month after his administration launched the direct talks in Washington. “Both the president and the prime minister have agreed that we will continue our discussions, ongoing in an effort to move forward in this process toward what we all share as a common goal: the establishment of comprehensive peace in the Middle East,” Mitchell told reporters in Ramallah. “There remain obstacles. Our determination continues,” he said. Earlier in Occupied Jerusalem, Netanyahu said: “We are making efforts together with Senator Mitchell to continue to hold the talks with President Abbas. We want the talks to continue.” Abbas says he will pull out of the talks unless Israel extends its 10-month freeze on new building in Jewish settlements in the occupied West Bank, which expired this week. Palestinians say the growth of the settlements, on land Israel has occupied since 1967, will render impossible the establishment of a Palestinian state in the West Bank and Gaza Strip - the stated goal of the peace talks. Some 500,000 Jews live on territory where the Palestinians aim to establish their state with East Jerusalem as its capital. Saeb Erekat, the chief Palestinian negotiator, said the United States would “continue in their bilateral efforts between us and the Israelis, each separately”. “The key to direct talks is in the hand of the Israeli prime minister. We hope that the Israeli leadership chooses peace and not settlement,” he said after Mitchell's meeting with Abbas. Mitchell said he would depart for Qatar, then Egypt and Jordan. Abbas has said he will take no final decision until the Arab League has discussed the issue. There were indications on Friday that the Oct. 4 date for an Arab League consultation would be set back to Oct. 8 at the request of Egypt. European Union foreign affairs chief Catherine Ashton said after talks with the principals that major powers engaged in the process were “very concerned that the ending of the moratorium should not put at risk the possibility of long-term peace”. “I have urged Israel to continue the moratorium and allow the talks more time to make greater progress,” Ashton said. Netanyahu is refusing to extend the construction moratorium and Israeli reports said he had rebuffed a US offer of “very generous” incentives to persuade him to extend it by 60 days. One official quoted Netanyahu as telling his advisors that it was not easy to freeze construction for the past 10 months and that he had lived up to his commitments to the Palestinians, the United States and the international community. “Now I expect the Palestinians to show some flexibility,” Netanyahu was quoted as saying. “Everyone knows that measured and restrained building in Judaea and Samaria (the West Bank) in the coming year will have no influence on the peace map.” A US State Department official denied reports that Obama sent Netanyahu a letter proposing security guarantees, including a continued Israeli troop presence in the Jordan Valley after the creation of a Palestinian state. But an Israeli official, who requested anonymity, confirmed that “the White House made an offer of incentives to Israel as described in the media but these were rejected by Netanyahu”. Israel's Yedioth Ahronoth daily said Obama had not signed off on the offer. The security proposals were floated in a paper drawn up last week by Israeli Defense Minister Ehud Barak and White House Middle East aide Dennis Ross, it said. It would have become a “presidential letter” only if Netanyahu had accepted.