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Israeli President Shimon Peres called on the EU Thursday to delay adopting settlement funding curbs as Palestinians and Israelis inch toward fresh peace talks.
"The coming days are critical," his office quoted him as saying in a statement. "Wait with your decision, give priority to peace."
The European Union is to publish new guidelines for its 28 member states on Friday that will block all funding of, or dealings with, Jewish settlements in the occupied West Bank, including annexed east Jerusalem.
Israeli Prime Minister Benjamin Netanyahu on Wednesday called US Secretary of State John Kerry, who is in neighbouring Jordan on his latest bid to revive direct negotiations between Israel and the Palestinians and warned that the EU was "damaging efforts to restart the talks".
Peres on Thursday said there were signs of progress in Kerry's shuttle diplomacy.
"From the latest information at my disposal, Secretary of State John Kerry has succeeded in advancing the chances of renewing peace talks," the statement quoted him as saying. "We are within touching distance."
"I appeal to our friends in Europe...do not lead a process of irresponsible sanctions which will torpedo diplomatic negotiations," he said.
The EU's office in Israel said on Thursday that Kerry, Peres and Netanyahu all called European Commission chief Jose Manuel Barroso on Wednesday night to discuss the guidelines.
It said in a statement that the EU is ready to negotiate with Israel regarding their planned entry into force from January 1 next year.
"Following a request from Israeli authorities the EU stands ready to engage in consultations on their implementation," it said.