Obama urges direct Mideast peace talks by Sept.

U.S. President Barack Obama said he hoped for direct Middle East peace talks to start before the end of September, as he and visiting Israeli Prime Minister Benjamin Netanyahu denied reports of a rift.

The leaders sat close together in the Oval Office Tuesday and staged a prolonged handshake for the cameras, seeking to put to rest a tense, closed-door encounter at the White House in March.

"I believe that Prime Minister Netanyahu wants peace. I think he's willing to take risks for peace," Obama said, and strongly disputed a question which suggested he had distanced the United States from Israel.

"The fact of the matter is, is that I've trusted Prime Minister Netanyahu since I met him before I was elected president and have said so both publicly and privately."

Offering his first suggestion of a timetable to step up Middle East negotiations, Obama said he hoped direct discussions would get going "well before" a 10-month Israeli moratorium on new housing construction in West Bank settlements expires in September.

Obama finessed the issue by saying he hoped progress towards direct negotiations from indirect U.S.-brokered proximity talks between Israelis and Palestinians would render that deadline irrelevant.

"My hope is that once direct talks have begun, well before the moratorium has expired, that that will create a climate in which everybody feels a greater investment in success," he said.

My hope is that once direct talks have begun, well before the moratorium has expired, that that will create a climate in which everybody feels a greater investment in success

US President Barack Obama

Palestinians yet to commit

Netanyahu again called on Palestinian President Mahmoud Abbas to meet him one-on-one and move from the current U.S.-mediated "proximity talks" to direct negotiations on Palestinian statehood.

However the Palestinians have yet to commit to direct talks, accusing Israel of undermining the atmosphere with continuing settlement activity.

He said he and Obama had discussed "concrete" steps that could be taken now.

"When I say 'the next few weeks,' that's what I mean. The president means that too."

The challenge now will be to get the Palestinians to accept the time frame that Obama has in mind.

Palestinian president Mahmoud Abbas "insists on the necessity of progress in indirect negotiations on core issues (borders, security) before going to direct negotiations," his spokesman Nabil Abu Rudeina told AFP by telephone.

The Israeli leader is under extreme pressure from his right-wing coalition not to cave in to any U.S. pressure to extend the moratorium, announced in November after Obama pushed for concessions to the Palestinians.

No change in policy

Netanyahu, who meets Wednesday with United Nations chief Ban Ki-moon, warned that the prime threat facing Israel was Iran's nuclear program, and praised new U.S. sanctions against Tehran as having "teeth" while calling for "much tougher" action from other nations.

And he said suggestions that Israel and the United States were drifting apart were not just "premature" but "flat wrong."

Obama also reassured Netanyahu that his administration had made "no change" to its policy regarding Israel's undeclared nuclear arsenal, amid concern among Israelis over his campaign for a nuclear free world.

Obama and Netanyahu appeared friendly towards one another, but their stern expressions at times reflected the grave nature of their talks. Both sides however seemed to want to put their spat into the past.

Netanyahu said it was "about time" that Obama visited Israel. "I'm ready," Obama said, without mentioning a date.

In March, Netanyahu was denied even a photo-op with Obama as a row raged over settlement expansion. This time, reporters were invited to watch the U.S. leader see the premier to his limousine and give him a wave goodbye.

Obama and Netanyahu were meeting for the first time since Israel's raid on an aid flotilla headed for Gaza in May, which killed nine Turks, and triggered a regional diplomatic crisis.

Israel on Monday gave the go-ahead for the import of construction materials into Gaza for projects under international supervision.

Obama commended Netanyahu for the move.

"We've seen real progress on the ground. I think it's been acknowledged that it has moved more quickly and more effectively than many people anticipated."

We've seen real progress on the ground. I think it's been acknowledged that it has moved more quickly and more effectively than many people anticipated

Obama