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"I have told clearly to President (Shimon) Peres this morning and this afternoon to the prime minister that they should refrain from further settlement," Ban told a news conference after talks with Netanyahu.
"This can be one of the ways of expressing a goodwill gesture," he said.
But Netanyahu appeared to reject taking such a measure.
"I think the question of settlements should be part of the final peace talks. It can't be a precondition," he said.
His spokesman Mark Regev said later Netanyahu spoke to US Secretary of State Hillary Clinton by phone, saying "Israel is interested in pursuing continued discussions with the Palestinians, and intends to preserve its security interests."
Ban is visiting Israel and the Palestinian territories for a series of meetings intended to convince both sides to continue so-called exploratory talks they started last month in Amman.
In the West Bank city of Ramallah, where he met Palestinian president Mahmud Abbas, the UN chief warned "these negotiations should not lose momentum."
The Palestinians have accused Israel of failing to present proposals on borders and security called for by the Quartet, and say they cannot continue talks unless Israel freezes settlements and agrees to parameters for discussions.
In Jerusalem, after meeting Peres, Ban made clear he wanted to see Israeli action to lure the Palestinians back to the table.
"Israel's cooperation in creating a positive dynamic is vital," he said.
"I hope that these talks can be sustained. I talked with President Peres about ways in which the UN and the international community might support their talks."
The five rounds of talks between Israeli and Palestinian negotiators, sponsored by the peacemaking Quartet, ended without a deal to continue discussions or return to direct negotiations.
The Palestinians want a settlement freeze and a framework for talks that would base border discussions on the lines that preceded the 1967 Six-Day War.
Israel says it wants talks without preconditions, but Ban said on Tuesday it was key for the Jewish state to offer gestures, which could include concessions on the issue of settlement activity on Palestinian land.
In an interview with a small group of reporters including AFP in Amman late on Tuesday, Ban said he expected "a gesture of goodwill by both sides."
But it would be "more important for the Israelis to show such a gesture of goodwill to create the favourable atmosphere," so Abbas can justify staying in talks, the UN leader said.
Ban said action on settlement construction could be a way for Israel to demonstrate that goodwill.
The United Nations, a Quartet member along with the United States, European Union and Russia, considers Israel's construction in the occupied West Bank and east Jerusalem to be a violation of international law.
Ban's trip, which concludes on Thursday in Gaza -- from where four rockets were fired into Israel on Wednesday, causing neither casualties nor damage -- comes as Quartet representatives try to ensure the Amman talks continue.
EU foreign policy chief Catherine Ashton visited both sides last week, and US envoy David Hale is expected in Ramallah for talks with Abbas on Thursday.
The Amman talks were part of a Quartet timeline intended to bring the two sides to the table for the first time since direct talks broke down in September 2010 over the issue of settlement construction.
The Quartet on October 26 asked both sides to submit comprehensive proposals on territory and security within three months as a precursor to the resumption of talks, something the Palestinians say they have done.
Israel says it considers the three-month period to have begun with the first rounds of talks in Amman on January 3.
The international community has urged both sides to continue talking, and in recent days reports have suggested that the talks' sponsors believe a package of confidence-building measures will be necessary to lure the Palestinians back.
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"This can be one of the ways of expressing a goodwill gesture," he said.
But Netanyahu appeared to reject taking such a measure.
"I think the question of settlements should be part of the final peace talks. It can't be a precondition," he said.
His spokesman Mark Regev said later Netanyahu spoke to US Secretary of State Hillary Clinton by phone, saying "Israel is interested in pursuing continued discussions with the Palestinians, and intends to preserve its security interests."
Ban is visiting Israel and the Palestinian territories for a series of meetings intended to convince both sides to continue so-called exploratory talks they started last month in Amman.
In the West Bank city of Ramallah, where he met Palestinian president Mahmud Abbas, the UN chief warned "these negotiations should not lose momentum."
The Palestinians have accused Israel of failing to present proposals on borders and security called for by the Quartet, and say they cannot continue talks unless Israel freezes settlements and agrees to parameters for discussions.
In Jerusalem, after meeting Peres, Ban made clear he wanted to see Israeli action to lure the Palestinians back to the table.
"Israel's cooperation in creating a positive dynamic is vital," he said.
"I hope that these talks can be sustained. I talked with President Peres about ways in which the UN and the international community might support their talks."
The five rounds of talks between Israeli and Palestinian negotiators, sponsored by the peacemaking Quartet, ended without a deal to continue discussions or return to direct negotiations.
The Palestinians want a settlement freeze and a framework for talks that would base border discussions on the lines that preceded the 1967 Six-Day War.
Israel says it wants talks without preconditions, but Ban said on Tuesday it was key for the Jewish state to offer gestures, which could include concessions on the issue of settlement activity on Palestinian land.
In an interview with a small group of reporters including AFP in Amman late on Tuesday, Ban said he expected "a gesture of goodwill by both sides."
But it would be "more important for the Israelis to show such a gesture of goodwill to create the favourable atmosphere," so Abbas can justify staying in talks, the UN leader said.
Ban said action on settlement construction could be a way for Israel to demonstrate that goodwill.
The United Nations, a Quartet member along with the United States, European Union and Russia, considers Israel's construction in the occupied West Bank and east Jerusalem to be a violation of international law.
Ban's trip, which concludes on Thursday in Gaza -- from where four rockets were fired into Israel on Wednesday, causing neither casualties nor damage -- comes as Quartet representatives try to ensure the Amman talks continue.
EU foreign policy chief Catherine Ashton visited both sides last week, and US envoy David Hale is expected in Ramallah for talks with Abbas on Thursday.
The Amman talks were part of a Quartet timeline intended to bring the two sides to the table for the first time since direct talks broke down in September 2010 over the issue of settlement construction.
The Quartet on October 26 asked both sides to submit comprehensive proposals on territory and security within three months as a precursor to the resumption of talks, something the Palestinians say they have done.
Israel says it considers the three-month period to have begun with the first rounds of talks in Amman on January 3.
The international community has urged both sides to continue talking, and in recent days reports have suggested that the talks' sponsors believe a package of confidence-building measures will be necessary to lure the Palestinians back.
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