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

The two leaders sat close together in the Oval Office and staged a prolonged and tight handshake for the cameras, seeking to move on from a tense encounter in March when Mr Netanyahu was denied the trappings of a visiting foreign leader.

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

"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." Mr Netanyahu warned during the talks that the prime threat facing Israel was Iran's nuclear programme, and praised new US sanctions against Tehran as having "teeth" while calling for "much tougher" action from other nations.

Significantly, Mr Obama also reassured Mr 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.

The talks went ahead with intense interest surrounding a partial Israeli freeze on settlement building which is due to expire in September.

Mr Obama finessed the issue by saying he hoped progress towards direct talks from indirect US-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.

Mr Netanyahu says he is ready to meet Palestinian President Mahmud Abbas at any time, but the Palestinians accuse Israel of undermining the push for talks with mere public relations moves while continuing settlement building activity.

Mr Netanyahu is under extreme pressure from his right-wing coalition not to cave in to US demands to extend the moratorium, announced in November after President Obama's administration pushed for concessions to the Palestinians.

The Palestinians, who argue the partial freeze does not go far enough, would likely react furiously if it is not extended, souring the mood for new direct talks.

The Palestinians froze direct negotiations in December 2008 when Israel launched a deadly 22-day offensive against the Hamas-ruled Gaza Strip to halt rocket attacks.

Mr Obama's aides insist the proximity talks have "narrowed gaps" and are making progress - despite Palestinian claims they have yielded little progress.

A diplomatic flurry in the run-up to this visit, including talks on Monday between Israeli Defence Minister Ehud Barak and Palestinian Prime Minister Salam Fayyad, suggested movement in the stagnant peace process. Mr Obama also recently met Mr Abbas and Saudi King Abdullah at the White House.

Mr Obama and Mr 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.

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