Washington called for "a holding period" in the Middle East peace process after a deadline for reaching a deal expired with hopes dashed and Israel and the Palestinians bitterly divided.
US Secretary of State John Kerry has no regrets about the energy he poured into his failed Middle East peace bid and is ready to dive back in again if asked, US officials said.
As the final date for the nine-month negotiation period came and went on Tuesday, peace hopes appeared more remote than ever with Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmud Abbas locked in a tactical game of finger-pointing, and US attempts to broker an extension in tatters.
After more than a year of intensive shuttle diplomacy by Kerry, Washington was reluctant to admit failure, acknowledging only a "pause" in the dialogue.
"The original negotiating period was set to run until April 29th, today. There's nothing special about that date now," State Department spokeswoman Jen Psaki told reporters in Washington.
But Kerry has "no regrets about the time he spent investing in this process".
"We've reached a point... where a pause is necessary... a holding period, where parties will figure out what they want to do next," Psaki said.
The Israeli and Palestinian leaders were quick to say they were open to resuming talks -- but only under certain conditions likely to be unacceptable to the other side.
"If we want to extend the negotiations there has to be a release of prisoners ... a settlement freeze, and a discussion of maps and borders for three months, during which there must be a complete halt to settlement activity," Abbas said.
But a senior Israeli government official said there would be no further talks unless Abbas renounced a reconciliation pact signed last week with Gaza's Islamist Hamas rulers.
- Back to square one -
Analysts said the end of the negotiating period meant the situation would simply go back to square one.
"We’re back to where we started," said Jonathan Spyer, senior researcher at the Global Research in International Affairs Centre near Tel Aviv.
The Palestinians, he said, were likely to continue with their "strategy of political warfare" by seeking global recognition for their promised state, in a bid "to isolate Israel in international bodies and pressure it into making concessions".
Israel, Spyer said, was unlikely to make any sweeping gestures but merely seek to maintain the status quo by seeking to either "ignore, or reverse" the Palestinian diplomatic moves.
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Other Israeli analysts said the collapse of the talks was a direct result of Israel's relentless settlement construction on land which was the subject of negotiations.
Figures published on Tuesday by settlement watchdog Peace Now showed that in parallel with the negotiations, the Israeli government approved plans for nearly 14,000 new settler homes, describing it as an "unprecedented number".
Meanwhile a mosque was among several Palestinian structures destroyed by the Israeli army Tuesday in a West Bank village for having been built without permits, concurring sources said.
- Poor choice of words -
As the curtain fell on the talks, Kerry found himself at the centre of a storm after reportedly saying that if Israel didn't seize the opportunity to make peace soon, it risked becoming an "apartheid state" with second-class citizens.
"Apartheid" refers to South Africa's 1948-1994 oppressive and racially segregated social system.
In an apology issued overnight, Kerry said he had never called Israel "an apartheid state" but he did not deny using the term, suggesting only that he used a poor choice of words.
Chief Palestinian negotiator Saeb Erakat accused Netanyahu's government of using the talks as a cover to entrench its hold on the territories.
"Rather than using nine months to achieve a two-state solution, the government of Prime Minister Netanyahu has used every possible tool in order to consolidate its apartheid regime," he said.
In a apparent shift in the US policy, Psaki appeared to suggest that Washington may be prepared to accept a reconciliation government providing it stood by principles such as non-violence and recognising the state of Israel.
"If the unity government accepts certain principles, then it hasn't been our position to oppose that," Psaki said.
But she stressed: "They haven't indicated a desire to abide by the principles -- Hamas, that is."
However US lawmakers and officials warned Tuesday that Palestinian leaders risk forfeiting millions of dollars in US aid if they press ahead with plans to form a unity government including militant Hamas members.
"Let me be utterly clear about our policy towards Hamas," Assistant Secretary for the Near East Anne Patterson told a House hearing.
"No US governmental money will go into any government that includes Hamas until Hamas accepts the Quartet conditions. And that's renouncing violence, recognizing previous agreements and most explicitly recognizing Israel's right to exist."