* Gaps remain after latest mediation session, U.S. says
* Kerry due to meet Obama, with troubled talks on agenda
* U.S. trying to keep talks going beyond April 29 deadline (Adds comment by Palestinian U.N. envoy)
By Jeffrey Heller
JERUSALEM, April 8 (Reuters) - Israeli and Palestinian negotiators ended another U.S.-mediated session on Tuesday with no sign of a breakthrough in efforts to save peace talks from collapse, but an Israeli official said they had agreed to meet again.
In a statement about the latest discussions, U.S. State Department spokeswoman Jen Psaki said: "Gaps remain, but both sides are committed to narrow the gaps."
The U.S.-brokered negotiations, which began in July, plunged into crisis last week after Israel, demanding a Palestinian commitment to continue talking beyond an April 29 deadline for a peace deal, failed to carry out a promised release of about two dozen Palestinian prisoners.
Palestinian President Mahmoud Abbas responded by signing 15 global treaties, including the Geneva Conventions on the conduct of war and occupations, on behalf of the State of Palestine, a defiant move that surprised Washington and angered Israel.
Israeli Foreign Minister Avigdor Lieberman, speaking on Israel Radio on Tuesday, said Abbas would have to reverse that step in order for the prisoner release to be re-addressed.
Prime Minister Benjamin Netanyahu has threatened unspecified retaliation in response to what Israel views as a unilateral statehood move by Abbas. Palestinian Foreign Minister Riad al-Malki said Abbas would appeal at an Arab League meeting in Cairo on Wednesday for political and economic support in the event of Israeli punitive measures.
Palestinian U.N. Ambassador Riyad Mansour said on Tuesday that the Palestinians were prepared to join more international groups if Israel retaliated. As a U.N. non-member state, Palestinians can join 63 international agencies and accords.
"If they want to escalate further and try to illegally punish us for doing something legal, we are ready and willing to send the second barrage, the third barrage and more of what legally we could do," Mansour told the U.N. Committee on the Exercise of the Inalienable Rights of the Palestinian People.
As part of the U.S.-led bid to salvage the talks, Israeli chief negotiator Tzipi Livni and Palestinian counterpart Saeb Erekat, along with U.S. mediator Martin Indyk, reconvened late on Monday after what the United States had described as a "serious and constructive" meeting on Sunday.
"The atmosphere was business-like and the sides agreed to meet again to try to find a solution to the crisis," said an Israeli official, who asked not to be identified, after the latest talks wrapped up in the early hours of Tuesday.
The official did not say when the next meeting would be held. There was no immediate Palestinian comment about any future session.
Expectations among the Israeli and Palestinian public of a peace deal have been low from the start. The talks have stalled over Palestinian opposition to Israel's demand that it be recognised as a Jewish state, and over settlements built on occupied land Palestinians seek for a country of their own.
Looking ahead to possible Israeli economic sanctions, al-Malki said that at the Arab League session, Abbas would voice concern Israel might again withhold tax revenues it transfers to the Palestinian Authority (PA).
Interim peace deals task Israel with collecting taxes and customs duties for the PA amounting to around $100 million a month, on goods imported into the Palestinian territories. Israel has previously frozen the payments during times of heightened security and diplomatic tensions.
Secretary of State John Kerry, who has signalled he may scale back his mediating efforts due to "unhelpful actions" by both sides, was due to meet President Barack Obama on Tuesday, with the state of the peace negotiations high on the agenda.
A senior official in Abbas' Fatah party said that in order for the talks to continue, Palestinians would need a written commitment from Israel recognising a Palestinian state within all of the territory in the West Bank and Gaza Strip captured in the 1967 Middle East war, with East Jerusalem as its capital.
Israel has described those West Bank borders as indefensible and considers East Jerusalem as part of its capital, a claim not recognised internationally. Israel pulled out of the Gaza Strip, now ruled by Hamas Islamists, in 2005.
The Fatah official said Palestinians were also demanding a cessation of settlement activity and a prisoner release.
Palestinians fear settlements, viewed as illegal by most countries, will deny them a viable state and have condemned a series of Israeli construction projects announced while talks have been under way. (Additional reporting by Noah Browning in Ramallah and Michelle Nichols at the United Nations; editing by Ralph Boulton and Gunna Dickson)
Our Standards: The Thomson Reuters Trust Principles.