US Secretary of State Hillary Clinton met Israeli Prime Minister Benjamin Netanyahu yesterday as new strains between the two allies over Jewish settlements clouded hopes for further peace talks.

Ahead of the meeting, President Barack Obama and Ms Clinton led global criticism of Israel’s latest plans to build 1,300 houses in occupied east Jerusalem, where the Palestinian wish to form the capital of their future state.

Mr Netanyahu dismissed the international response as “overblown,” with his office saying on Tuesday there was “no connection between the peace process and the planning and building policies in Jerusalem”.

Peace talks grounded to a halt in September shortly after their launch when a 10-month Israeli moratorium on West Bank settlement construction expired, with the Palestinians refusing to talk until the ban is re-imposed.

This week’s announcement prompted Palestinian President Mahmoud Abbas on Wednesday to call on the United Nations Security Council to urgently debate Israeli settlement building, again complicating the US task.

Warning against “unilateral steps” and expressing “deep disappointment” with the Israeli move, Ms Clinton nevertheless sought to remain upbeat as Washington struggled to keep peace talk hopes alive.

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