Washington said Friday it was reviewing its push for a Middle East peace agreement as a spiral of tit-for-tat moves by Israel and the Palestinians took hard-won talks close to collapse.
US Secretary of State John Kerry, who has invested more than a year of intensive shuttle diplomacy, said there were "limits" to the time Washington could devote to the process.
"This is not open-ended," Kerry said in Morocco, adding that it was "reality check" time and he would evaluate with President Barack Obama Washington's next move.
"There are limits to the amount of time and effort that the United States can spend if the parties themselves are unwilling to take constructive steps."
Kerry spoke to both Israeli and Palestinian leaders on Thursday in a desperate bid to bring the two sides back from the brink.
But Palestinian president Mahmud Abbas rejected his appeals to withdraw the applications he signed on Tuesday to adhere to 15 international treaties, a Palestinian official told AFP.
And Israeli Prime Minister Benjamin Netanyahu ignored appeals to refrain from "unhelpful" tit-for-tat moves and asked officials to draw up a range of tough reprisals, Israeli media reported.
Kerry said Washington currently had an "enormous amount on the plate", highlighting negotiations with the Russians over Ukraine, talks with Iran on its nuclear programme and the Syrian conflict, as other US priorities.
"Both parties say they want to continue, neither party has said they want to call it off; but we're not going to sit there indefinitely, this is not an open-ended effort."
A State Department spokeswoman attempted to take the sting out of Kerry's remarks, insisting there was still a peace process to which the US remained "committed".
"We're still negotiating," Marie Harf said.
"Until we get to the end of this process, we should all be cautious about making predictions about what will come next," she added.
Israel says Tuesday's move by Abbas is a clear breach promises made by the Palestinians when peace talks were relaunched in July to pursue no other avenues for recognition of their promised state.
The Palestinians say Israel had already reneged on its own commitments by failing to release a fourth and final batch of Arab prisoners on the weekend, and that the treaty move was their response.
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- 'Threats scare no one' -
Kerry spoke to both Netanyahu and Abbas from North Africa to appeal to them to reconsider.
But Abbas dismissed his warnings about the consequences of pressing ahead with the treaty applications, a Palestinian official told AFP on condition of anonymity.
Kerry warned that "Israel was threatening a strong response to Palestinian actions," the official said.
But Abbas retorted: "Israel's threats scare no one. They can do what they like," the official added.
Both sides insisted they remain ready to talk, and US envoy Martin Indyk met Palestinian chief negotiator Saeb Erakat in Jericho on Friday.
But as the steps and counter steps multiplied, the talks looked close to collapse, even before their scheduled end on April 29.
Netanyahu was looking into a range of tough options to punish the Palestinians, Haaretz newspaper reported, including withholding tax revenues levied by Israel on behalf of the Palestinian Authority.
Israel briefly imposed the same crippling measure in December 2012 to punish the Palestinians' successful drive for observer state status at the United Nations, despite strong opposition from Israel and the US.
The interior ministry gave the green light for a controversial visitor centre in an Arab neighbourhood of annexed east Jerusalem.
Justice Minister Tzipi Livni, Israel's chief peace negotiator, told the Palestinians there had been a chance of a belated release of the final batch of prisoners.
But she said this had been scuppered by the treaty move, a source close to the talks told AFP.
Some 1,500 Palestinians demonstrated Friday outside Ofer military prison near Ramallah, rallied by the families of those who were to have been freed on March 29.
Eight protesters were wounded by gunfire from Israeli troops, medics said, two in serious condition.
An army spokeswoman said "200 Palestinians" had "hurled rocks and burning tyres at security forces" and soldiers responded with "riot dispersal methods and small calibre rounds".