TEL AVIV - Israeli Prime Minister Benjamin Netanyahu expects no breakthroughs at a meeting this week with a U.S. peace envoy, but hopes talks with the Palestinians can resume within two months, a spokesman said on Monday.

A right-winger in power since March, Netanyahu has resisted Western pressure to freeze Jewish settlements on occupied land where Palestinians seek statehood. The dispute has opened a rare rift between Israel and its top ally, the United States.

Speaking before a London visit during which Netanyahu is due to meet U.S. envoy George Mitchell, his spokesman Nir Hefetz told reporters: The prime minister expects there to be a certain degree of progress, but no breakthrough is expected.

Mitchell has been trying to reach an agreement with Israel on a settlement freeze that U.S. President Barack Obama has demanded in accordance with a 2003 peace road map that also calls on the Palestinians to rein in militants.

Netanyahu will make clear that Israel intends to attend to the normal needs of its settlers alongside a political process that is to be launched in about two months' time, Hefetz said.

Media reports have spoken of a possible summit between Netanyahu and Palestinian President Mahmoud Abbas, overseen by Obama, on the sidelines of next month's U.N. General Assembly in New York.

Netanyahu's four-day trip to London and Berlin includes talks with British Prime Minister Gordon Brown and German Chancellor Angela Merkel. Both leaders have been critical of Israel's settlement policy.

Abbas has made a resumption of peace talks with Israel, suspended since December, conditional on a settlement freeze.

Anything short of complying with the demands of the road map, with the demands of President Obama ... (and) the Palestinians won't be able to go to any negotiations, said Nabil Abu Rdainah, an Abbas spokesman.

U.S. ASSURANCES

Israeli media reports suggest a wide gap remains between Israel and Washington. Netanyahu is keen to limit any settlement freeze to a six-month period and continue projects already under way. The United States wants at least a two-year suspension.

Netanyahu has also sought U.S. assurances that a settlement deal would be accompanied by initial steps by Arab countries to normalize ties with Israel.

The prime minister has not agreed to anything, and I don't know if he will agree, Israeli Culture Minister Limor Livnat said when asked in a radio interview about the U.S. overtures.

But Netanyahu's talks could result in a deal for a period of time (limiting) the launch of new construction projects in West Bank settlements, Livnat told Israel Radio.

Some 500,000 Jews live in the West Bank and Arab East Jerusalem, territory Israel captured in a 1967 war and also home to 2.5 million Palestinians. The World Court has branded the settlements illegal. Nor has Israel's claim to all of Jerusalem as its eternal and undivided capital been recognized abroad.

Palestinians want to establish a state in the West Bank and Gaza Strip, with its capital in Jerusalem. But Abbas's mandate is shaky, as rival Hamas Islamists who reject coexistence with the Jewish state seized control of Gaza in 2007.
(Reporting by Allyn Fisher-Ilan; Writing by Dan Williams; Editing by Jon Hemming)

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