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Kerry has faced fierce opposition from both sides to any compromise on mostly irreconcilable demands.
US Secretary of State John Kerry met Israeli Prime Minister Benjamin Netanyahu on Thursday, after arriving on a four-day visit aimed at pushing Middle East peace talks forward.
The two men held talks in Jerusalem, launching what is expected to be an intense process of shuttle diplomacy between Israeli and Palestinian leaders.
Kerry has faced fierce opposition from both sides to any compromise on mostly irreconcilable demands since he kick-started direct negotiations in July after a three-year hiatus.
His visit comes with Palestinian and Israeli leaders accusing each other of lacking serious commitment to achieving lasting peace after decades of conflict.
A State Department official told AFP ahead of Kerry's trip that he aims to hammer out a framework to guide the sides through the tough final months of talks, due to end in late April after an agreed nine-month negotiating period.
"I plan to work with both sides more intensely in these next days to narrow the differences on a framework that will provide the agreed guidelines for permanent status negotiations," Kerry told reporters after meeting Netanyahu.
"An agreed framework would be a significant breakthrough," he added.
Kerry and his team, led by special envoy and former ambassador Martin Indyk, hope to have the framework in place soon, addressing the core issues.
These include the contours of the borders of a future Palestinian state, the fate of Jerusalem which both sides claim as their capital, and Palestinian refugees.
The Palestinians want borders based on the 1967 lines that existed before the Six-Day War, when Israel captured the West Bank and east Jerusalem.
But Israel wants to hold onto existing settlements it has built inside occupied Palestinian territory since then.
On security, Israel wants to maintain a military presence in the Jordan Valley, where the West Bank borders Jordan, under any future peace deal.
The Palestinians reject this demand, seeking instead for an international force to be stationed there to guarantee security.
Palestinians reject Jordan Valley proposal
A senior official in the Palestine Liberation Organisation reiterated Palestinian rejection of US proposals for security in the Jordan Valley, in a statement released after Kerry's arrival.
"The proposed framework restricts Palestinian sovereignty on Palestinian territory," Abed Rabbo said.
"A measure that could really push the talks forward is drawing up complete borders between the Palestinian state and Israel, based on the 1967 lines... and having a clear timetable for withdrawal from all Palestinian territory."
Kerry's visit comes two days after Israel freed the third of four batches of 104 veteran Palestinian prisoners as a goodwill gesture agreed under the talks process.
However, the release was expected to be followed by announcements of further Israeli settlement expansion on Palestinian territory, an issue that has crippled the talks and angered the international community.
A US State Department official told AFP before the visit that Israeli settlement expansion had created difficulties in the negotiations, and reiterated Washington's position that the settlements are illegitimate.
Israeli media reported Thursday that Netanyahu would postpone the expected announcement of some 1,400 new settler homes until after Kerry leaves on Sunday.
Previous announcements directly coincided with the first and second Palestinian prisoner releases.
Several thousand new settler homes, the building of which is illegal under international law, have been announced since the talks started.
The Palestinians have threatened to sue Israel through the international courts should it continue to expand its settlements.
But Palestinian president Mahmud Abbas has reiterated a commitment to seeing out the nine months of talks before taking such action.
Despite the differences between the two sides, the 70-year-old former senator Kerry has proved persistent in his efforts to keep the peace process alive.
His trip comes after several violent incidents, the happening as Kerry and Netanyahu met when Israeli troops shot and wounded a 16-year-old Palestinian near the border fence in the northern Gaza Strip.