UN Secretary-General Ban Ki-moon told the Security Council he was "not optimistic" following his talks with Israeli and Palestinian leaders, appealing for calm after three weeks of deadly unrest.
Ban travelled to the region this week to urge the Israelis and Palestinians to pull back from a "dangerous escalation" that could lead to a full-scale Palestinian uprising.
He offered no public proposals to end the unrest, but spoke of returning to "meaningful negotiations" after more than a year of frozen peace efforts and seething frustration with Israel's occupation.
"We will continue to support all efforts to create the conditions to make meaningful negotiations possible," Ban said after meeting Abbas in the West Bank city of Ramallah.
"Our most urgent challenge is to stop the current wave of violence and avoid any further loss of life."
Underlining the atmosphere of fear and mistrust in the region, a private security guard shot dead an Israeli man in Jerusalem just hours later after mistaking him for a "terrorist", according to a police spokesman.
A passenger getting off a bus argued with two armed guards trying to get on it, and attempted to grab one guard's gun after being asked for his identity papers. He was shot dead by the guard during the tussle.
At least 47 Palestinians and one Arab Israeli have been killed in the upsurge in violence that began at the start of the month, including alleged attackers. At least eight Israelis have died.
Also on Wednesday, a woman was shot and wounded after allegedly approaching an Israeli settlement with a knife.
Later in the day, an Israeli soldier was seriously wounded in a stabbing near a West Bank settlement and her attacker shot dead.
And in the evening, a Palestinian drove his car into a group of Israelis in the West Bank, injuring five of them, before being shot and seriously wounded by soldiers.
Ban also met families of victims of the latest wave of violence before travelling to Amman, where he is due to meet the Jordanian king.
- Limited appetite for compromise -
In his behind-closed-doors report to the Security Council, Ban delivered a sobering assessment of prospects for a return to calm, according to a diplomat, saying there was no time to waste to press for a de-escalation and pull the sides back from the brink.
The UN chief presented a report prepared by his legal experts on international protection after the Palestinians called for the deployment of an observer force in east Jerusalem.
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The report, seen by AFP, outlines 17 cases -- from Trieste after World War II to Kosovo in 1999 -- when the Security Council stepped in and set up special regimes to guarantee the protection of civilians.
In a letter to the council, Ban said the report should not be seen as an "options paper" for addressing the crisis but added that it could be useful in "informing future work on this subject".
Israeli Prime Minister Benjamin Netanyahu showed little appetite for compromise when meeting Ban on Tuesday, harshly criticising Palestinian president Mahmud Abbas for "fanning the flames" and rejecting allegations that Israel has used excessive force.
He repeated the assertion in Berlin on Wednesday.
"If we want to have peace we have to stop terror. And to stop terror we have to stop incitement," he said after talks with Chancellor Angela Merkel on the eve of a meeting with US Secretary of State John Kerry.
Kerry hopes talks this week with the Israeli and Palestinian leaders will provide some "political breathing space", the State Department said.
The top US diplomat is also due to meet Jordan's King Abdullah II.
- Al-Aqsa flashpoint -
Abbas meanwhile called on Israel to strictly respect rules governing Israeli-annexed east Jerusalem's flashpoint Al-Aqsa mosque compound, known to Jews as the Temple Mount.
Clashes between Israeli security forces and Palestinian protesters at the compound in September sparked the current wave of violence.
Violent protests have also erupted in east Jerusalem, the occupied West Bank and the Gaza Strip.
"The continued occupation and aggression against Christian and Muslim holy sites in east Jerusalem, particularly against Al-Aqsa, opens the door to a religious conflict, which has unfortunately started," said Abbas.
Netanyahu has repeatedly accused Abbas of incitement by suggesting Israel wants to change the status quo of the compound, sacred to both Muslims and Jews.
Muslims fear Israel will seek to change rules governing the site, where Jews are allowed to visit but not pray to avoid provoking tensions.
Netanyahu says he has no intention of changing the rules.