U.S. Secretary of State Hillary Rodham Clinton, met with Israeli Prime Minister Benjamin Netanyahu, left, and Palestinian President Mahmoud Abbas in Sharm El-Sheikh, Egypt on Tuesday. (Alex Brandon/Associated Press)

The latest round of talks between Israeli and Palestinian leaders has ended for the day without any reported progress on the divisive issue of Israeli settlements.

U.S. Secretary of State Hillary Rodham Clinton convened the new round of negotiations Tuesday in Sharm El-Sheikh, Egypt, saying the "time is ripe" for a Mideast peace deal.

Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas held an extra, unscheduled session with Clinton, but there was no word on signs of a breakthrough.

U.S. peace envoy George Mitchell said the core issues in the peace process were discussed, but all sides agreed not to reveal which ones or to what result.

"I'm not going to attempt to identify each one that was discussed, but several were in a very serious, detailed and extensive discussion," Mitchell said at a news conference.

The most pressing dispute is a soon-to-expire curb on new construction for Israeli settlements in the West Bank.

The Palestinians want the curb extended beyond the current Sept. 26 deadline, but Netanyahu has suggested at least some of the restraints will be lifted.

Clinton said the Obama administration believes Israel should extend the moratorium, but she also said it would take an effort by both sides to find a way around the problem.

"We recognize that an agreement that could be forged between the Israelis and the Palestinians … that would enable the negotiations to continue is in the best interests of both sides," she said.

Clinton spoke with reporters Monday during a flight from Washington to Egypt for the latest round of the current Mideast peace talks, which began earlier this month in Washington, D.C. After her arrival early Tuesday, she met with Egyptian President Hosni Mubarak before separate sit-downs with Abbas and Netanyahu.

The settlement freeze is not the only wrinkle in the way of launching the talks in earnest. The two sides are bickering over what to discuss first: security or borders.

Palestinian negotiator Saeb Erekat said late Monday that the agenda for the talks had been agreed upon in Washington.

'If you want to pick the right path, borders should come first.'— Saeb Erekat, Palestinian negotiator

"The agenda includes final status issues: Jerusalem, borders, settlements and refugees, security and prisoners," he told reporters. "If you want to pick the right path, borders should come first. If you don't want to reach [an agreement] pick some other paths."

A senior Abbas aide, Mohammed Ishtayeh, told reporters an Israeli extension of the partial freeze would not signal progress in the negotiations but rather progress in "confidence building."

"The freeze on settlements [construction] is not a topic in the negotiations," he said. "Removing settlements is."

Netanyahu spokesman Mark Regev told reporters: "If the expectation is that only Israel has to show flexibility, then that is not a prescription for a successful process."

On Sunday, Netanyahu seemed to reject a total freeze on construction, saying a Palestinian demand for no construction will not happen. He said Israel will not build thousands of planned homes, but without providing details or a timeline added, "We will not freeze the lives of the residents."

Although some analysts caution that any peace deal faces daunting obstacles, Clinton has said an initial round of talks in Washington on Sept. 2 generated some momentum. They were the first face-to-face talks between the two sides in nearly two years.

After Netanyahu and Abbas meet Tuesday in Sharm el-Sheikh, their talks will shift to Jerusalem on Wednesday. Clinton and former Sen. George Mitchell, Obama's special envoy to the region, planned to join the talks.

In a poll published Tuesday in Israel's Yediot Ahronot newspaper, 71 per cent of 501 Israelis polled by the Dahaf Research Institute said they doubted the latest round of talks would lead to an agreement.

Fifty-one per cent said the restraints on West Bank construction should be lifted, while 39 per cent said the slowdown should continue. The poll had a margin of error of 4.5 percentage points.

With files from The Associated Press