Kerry extends Mideast peace mission

US Secretary of State John Kerry extended for a third day on Saturday his shuttle diplomacy between Israeli and Palestinian leaders, raising speculation of progress in reviving long dormant peace talks.

He took a helicopter from Jerusalem to Amman where he spent two hours in talks with Palestinian president Mahmud Abbas then flew back again for his third meeting in under 48 hours with Israeli Prime Minister Benjamin Netanyahu.

A US official said Netanyahu would be accompanied to the evening meeting by Justice Minister Tzipi Livni, Israel's designated negotiator to talks with the Palestinians, and by Netanyahu's personal envoy Yitzhak Molcho.

"Working hard," Kerry told a reporter who asked if he was making progress as he and Abbas began their second round of talks in as many days.

In a potential sign of headway, Kerry cancelled a dinner he had scheduled for Saturday night in Abu Dhabi, part of his separate tour in the past week through Gulf Arab states to coordinate support for rebels in Syria's civil war.

State Department spokeswoman Marie Harf said Kerry would still head to a meeting of Asian ministers in Brunei starting on Monday but called off the Abu Dhabi stop because his "meetings on the peace process remain ongoing".

US officials have said little on the closed-door discussions, saying public comments would risk the fluid diplomacy.

Kerry was expected to speak before leaving the region but Israeli public radio said his failure to hold an expected news conference in Amman on Friday suggested stumbling blocks in the talks.

"(Israeli) diplomatic sources were... talking to me about the possibility of a four-way summit in Amman in the coming week," the radio's diplomatic analyst Chico Menashe reported.

"Now, with the cancellation of today's planned press conference, it appears that there is still nothing to announce."

Kerry has spent seven hours since Thursday sounding out Netanyahu.

Kerry's aides have played down expectations of an imminent breakthrough and instead are hoping to make incremental progress to set the stage for substantive negotiations between Israel and the Palestinians.

The two sides have not formally met for peace talks since September 2010 and even then the negotiations broke down quickly, with Abbas saying Israel was not serious about a discussion on the future.

The Palestinian Authority wants Israel to freeze construction of Jewish settlements on occupied land and to promise any negotiations will be based on the principle of Israel withdrawing from land seized in the 1967 Six-Day War.

Netanyahu has rejected such "pre-conditions" but insists he remains ready to talk.

One idea floated is for Israel to agree not to announce new settlement construction but to make the commitment informally -- reducing the risk of revolt Netanyahu's largely right-wing governing coalition.

Economy Minister Naftali Bennett, who heads the far-right Jewish Home party, recently described the Palestinian issue as "shrapnel in the buttocks" -- a problem Israel simply had to keep suffering through -- but threatened to quit if the government agreed to a Palestinian state.

Abbas, whose rule is effectively confined to the West Bank, also faces Palestinian divisions.

Ismail Haniya, the Gaza-based prime minister of the rival Hamas movement, warned Abbas on Friday not to fall into the "trap of negotiations".

But Kerry heard encouraging words from Israeli President Shimon Peres over a two-hour Friday night dinner following the meeting with Netanyahu.

Peres now holds a largely ceremonial role but was identified with the peace process while prime minister.

The nearly 90-year-old Peres, welcoming Kerry at his official residence full of memorabilia from the decades-old peace process, acknowledged that "it is difficult, there are many problems" in moving forward.

"But as far as I'm concerned I can see how (among) people, there is a clear majority for the peace process, a two-state solution, and a great expectation that you will do it and that you can do it," Peres told him.