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U.S. hopes for Mideast peace traction

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Erekat said Abbas is studying a proposal to meet with Mofaz, the leader of what had been Israel's main opposition party until the hawkish Netanyahu brought it into government last month. Mofaz told a Washington think tank on Tuesday that he believes a peace agreement with the Palestinians should be Israel's most important bilateral goal.

Nuland would not comment on whether the administration was trying to broker such a meeting but said the U.S. is "looking for as much direct engagement between Israelis and Palestinians as we can have."

"Any combination of Israelis and Palestinians getting together and working on their issues would be a step in the right direction," she said.

Quiet informal meetings between Erekat and Molcho have been going on for weeks since the end of formal but technical talks mediated by Jordan earlier this year. But officials on both sides said the agenda has been modest and stressed there was no breakthrough in sight.

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