JERUSALEM (Reuters) - Israel's right-wing Prime Minister-designate Benjamin Netanyahu has abandoned efforts to woo centrist Tzipi Livni into forming a broad coalition government, a spokeswoman said on Saturday.

The decision, made after a second round of negotiations on Friday ended in disagreement, increased the likelihood that Netanyahu's Likud party would turn to rightist factions opposed to territorial withdrawals in peace talks with the Palestinians.

Livni, currently foreign minister, has accused Netanyahu of insufficient commitment to the U.S.-sponsored two-state vision

-- a future Palestine created in the West Bank and Gaza Strip, territories Israel captured in the 1967 Middle East war.

Netanyahu, an ex-premier whose popularity was buoyed by jitters at the Islamist Hamas takeover of Gaza after Israel withdrew in 2005, wants contacts with the Palestinians to focus on economic and security issues rather than territory.

The courtship is over. We are not scheduling any more talks with Kadima, said Dina Libster, a Netanyahu spokeswoman, referring to Livni's and Prime Minister Ehud Olmert's party.

If Livni wants to rethink her approach and contact us, she is welcome to.

A February 10 election to choose Olmert's successor gave Kadima, under Livni, the biggest number of parliament seats. But it also created a majority bloc of rightist factions, leading President Shimon Peres to task Netanyahu with forming a new government.

Saying political stability was needed to address challenges on the Palestinian front, a gathering economic crisis, and Israeli fears of Iran's nuclear programme, Netanyahu has expressed desire to lead as broad a coalition as possible.

Kadima said it would not be won over.

What Netanyahu wants is for us to provide cover for what will be a narrow right-wing government, and we won't do that, said a senior party official. We are content to lead the opposition and prove that we're the best alternative.

Losing Kadima as a potential partner leaves the center-left Laborparty of Defense Minister Ehud Barak, with whom Netanyahu was scheduled to hold a new round of talks on Sunday. But Barak's office played down expectations of a breakthrough.

Barak has made clear that Labour is destined for the opposition, one aide said.

Likud's likeliest ally appears to be the ultranationalist Yisrael Beiteinu party, which came third in the election.

That would mean a top cabinet post for the party's leader, Avigdor Lieberman, whose questioning of the loyalty of Israeli Arabs and hawkish talk on regional issues has prompted political analysts to predict a clash with the Obama administration.

I would certainly prefer the defense portfolio, Lieberman told Israel's Channel Two television. Yisrael Beiteinu is fit to handle any portfolio, and no one will disqualify us.

(Editing by Ralph Boulton)

Israel