Clinton, who has spent the last two days meeting key Israeli and Palestinians, will make the appeal in a speech in Washington at 8:00 pm (0100 GMT) Friday, her spokesman Philip Crowley told reporters.

"It will be a broad-ranging review of all dimensions of the challenge of Middle East peace," he said after Washington conceded Tuesday it had failed to get Israel to renew a freeze on settlements as a means to restart direct talks.

The direct talks were launched in Washington on September 2 only to bog down weeks later when a 10-month Israeli freeze on settlements in the West Bank lapsed and the Palestinians refused to return to the negotiating table.

In her speech at the Brookings Institution's Saban Center for Middle East Policy, Clinton "will discuss the way forward" over the weeks and months ahead, he said.

"She will remind everyone what is at stake and what the costs of the status quo are today," he added.

The chief US diplomat will "call on both sides, with the continuing support of others in the region to begin to grapple with the core issues of the conflict," Crowley said.

The core issues are Israel's security, the borders of a future Palestinian state, the fate of Palestinian refugees and the status of the holy city of Jerusalem, which both sides claim as their capital.

"And she will make clear that the United States remains committed to this process, but that responsibility to end the conflict ultimately rests with the parties themselves," he said.

Crowley conceded the two sides would no longer be holding the direct talks they launched three months ago with the aim of achieving a framework agreement on the core issues within a year.

But he declined to label them "indirect talks," which is what they were when US envoy George Mitchell served as a mediator between the two sides from May to September during his bid to launch the direct negotiations.

There was little sign of progress, meanwhile.

Chief Palestinian negotiator Saeb Erakat emerged earlier from an hour of talks with Clinton saying it was "premature to speak about a course of action" after the failure on settlements and again blamed Israel for the deadlock.

"The Israeli government had a choice between settlements and peace and they chose settlements," Erakat told reporters outside the State Department.

Erakat told AFP he held talks on Thursday with US Mideast peace envoy George Mitchell, his assistant David Hale and Assistant Secretary of State Jeffrey Feltman over the failed US attempt to secure a new settlement freeze.

In the meeting, Erakat reiterated that the Palestinians would not negotiate without a complete cessation of all settlement building in the occupied Palestinian territories, especially in east Jerusalem.

Mitchell is due to return to the Middle East on Monday for talks with Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmud Abbas, Crowley said.

In her flurry of consultations here, Clinton was also due to meet with Palestinian Prime Minister Salam Fayyad, and Israeli Defense Minister Ehud Barak.

US officials said she also met with Tzipi Livni, head of Israel's centrist opposition Kadima Party.

These talks follow sessions with Israel's chief peace negotiator Yitzhak Molcho on Thursday.

Top Palestinian officials were meeting in the West Bank city of Ramallah on Friday to discuss the collapse of direct talks with Israel, officials there said.

Speaking Thursday after meeting UN Secretary-General Ban Ki-moon in New York, Barak said Israel and the Palestinians must move beyond their dispute over settlement construction to find a new "formula" for peace negotiations.

Barak said the two sides had to find "a way that contains both a sense of urgency and a sense of purpose."

The UN chief "emphasized that it was vital to break the current diplomatic stalemate and resume negotiations," his spokesman said in a statement.

earlier related report
Split EU narrows Mideast plea to call for 'urgent progress'
Brussels (AFP) Dec 10, 2010 - The EU, under pressure from former European leaders to sanction Israel over the Middle East peace impasse, is expected due to its own divisions to restrict its stand to a plea for "urgent progress".

As Secretary of State Hillary Clinton steps up efforts to break the deadlock following a failed US push for an Israeli settlement freeze, European Union foreign policy chief Catherine Ashton has come under growing pressure to take tough action.

In a December 2 letter to Ashton, 26 former EU leaders, including her predecessor Javier Solana, urged her to threaten Israel with sanctions for failing to respect the freeze on new settlements.

It also calls for an April 2011 ultimatum for Israel to fall in line or see peace efforts referred back to the international community.

Coordinated by former foreign affairs commissioner Chris Patten and former French foreign minister Hubert Vedrine, the letter was signed by seven former premiers, three ex-presidents and seven former foreign ministers.

Signatories include former German chancellor Helmut Schmidt and ex-prime ministers Romano Prodi of Italy, Felipe Gonzalez of Spain and Lionel Jospin of France.

"We welcome any contribution to our policy," said Ashton's spokeswoman Maja Kocijancik on Friday.

In her December 7 response, Ashton agreed that "the issue of settlements remains a source of great concern".

She also "welcomed" a recent World Bank report commending the Palestinian Authority's progress "in institution-building and delivery of public services."

"It is well-positioned for the establishment of a state in any point in the near future", Ashton wrote.

She also reassured the 26 prominent Europeans that she remained committed to the EU's December 2009 position on the Middle East -- a peace based on a two-state solution, with Jerusalem "the future capital of two states."

But internal EU splits restricting the field of action for Ashton, who has made three visits to the region since taking on her position a year ago but came under sharp criticism for failing to attend the relaunch of direct Israeli-Palestinian talks in Washington in September.

And for many EU members -- notably Germany and the Czech Republic -- sanctions against Israel remain taboo.

Thus a statement to be issued by EU foreign ministers next week goes no further than saying "Urgent progress is needed towards a two state solution to the Israeli-Palestinian conflict," according to a draft seen by AFP.

The nine-paragraph statement reiterates the EU view that settlements "are illegal under international law and an obstacle to peace".

"The legitimacy of the State of Israel and the right of Palestinians to achieve statehood must never be called into question," says the draft, which may yet be changed ahead of the Monday meeting.

It also expresses the EU's readiness to assist in the reconstruction and economic recovery of Gaza and offers to help, with an estimated 10.7 million euros, improvements in infrastructure for crossing points as well as providing equipment and training Palestinians to operate the crossings.

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