* Abbas hopes U.S. will persuade Israel on settlements
* Clinton convinced that Abbas, Netanyahu want peace By Mohammed Assadi
RAMALLAH, West Bank, Oct 14 (Reuters) - The Palestinian president said on Thursday he expected the United States to convince Israel to halt settlement building on occupied Palestinian land so direct peace talks can resume.
President Mahmoud Abbas said Israel was "still putting obstacles" in the path of peace talks, singling out its construction of Jewish settlements on land where the Palestinians aim to found a state.
But expressing a hope that this would change, he said: "Let&${esc.hash}39;s focus on hope and not failure."
The Palestinians called off direct peace talks with Israel just a few weeks after they began last month when a 10-month Israeli freeze on new home building in the settlements expired.
Israeli Prime Minister Benjamin Netanyahu, head of a government dominated by parties that support the settlers, has so far resisted pressure from the United States to extend the freeze. He said this week the Palestinians should recognise Israel as a Jewish state to secure such a gesture.
Abbas, speaking at a news conference with Finnish President Tarja Halonen, reiterated the Palestinians&${esc.hash}39; long-standing rejection of that idea, which would amount to a major concession on an issue at the heart of the six-decade old conflict.
Abbas welcomed a decision by Arab leaders on Saturday to allow the United States one month to convince Israel to halt settlement building on land it has occupied since in the 1967 Middle East war. "If this happens, we have no objection, on the contrary, we are ready immediately to go to direct talks, starting with the issues of borders and security," Abbas said. "This is what is expected and what we hope will happen."
The United States launched the direct talks in Washington on Sept. 2. It wants the sides to return to negotiations.
"There is a lot of activity going on," U.S. Secretary of State Hillary Clinton said in an interview with ABC&${esc.hash}39;s "Good Morning America" in Brussels. "I&${esc.hash}39;m convinced that both President Abbas and Prime Minister Netanyahu want to be the leaders that resolve this conflict." (Writing by Tom Perry; Editing by Douglas Hamilton and Samia Nakhoul)
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