Palestinian President Mahmoud Abbas was quoted as saying on Friday that he doubted a full peace deal with Israel could be reached this year and urged the next U.S. administration to continue negotiations.
Launched last November with the goal of reaching a statehood agreement before U.S. President George W. Bush leaves office in January, the peace talks have been marred by violence and disputes over Jewish settlement building.
"It appears as if we will not be able to reach full agreement on the issues of Jerusalem, borders, refugees and water by the end of the year," Abbas told Israeli President Shimon Peres, Peres's office said in a statement.
"But we are determined to continue accelerated diplomatic negotiations concurrently with the change of administration in the United States," Abbas was quoted as saying. Abbas and Peres were attending a conference in Cernobbio, Italy.
Palestinian negotiator Saeb Erekat, in Cernobbio with Abbas, told Reuters officials still held out some hope that an agreement could be reached this year.
"We do not give up the possibility of an agreement this year but if we don't reach an agreement, we are going to continue negotiating uninterrupted," Erekat said.
Ehud Olmert left the peace talks in limbo by announcing that he would step down as Israeli prime minister once his centrist Kadima party had chosen a new leader later this month.
But Olmert will remain caretaker premier until a new government is formed, a process that could take months.
Both sides say some progress has been made.
Under one recent Olmert proposal, Israel would hand over to the Palestinians some 92.7 percent of the occupied West Bank, plus all the Gaza Strip, according to Western and Palestinian officials briefed on the negotiations.
In exchange for West Bank land that Israel would keep, Olmert proposed a 5.3 percent land swap giving the Palestinians a desert territory adjacent to the Gaza Strip.
But Olmert's proposal did not offer a solution to competing claims on the holy city of Jerusalem, and would only be implemented once Abbas reined in militants and re-established control of the Gaza Strip, which Hamas seized a year ago.
Abbas has in recent days rebuffed any partial agreement with Israel, Reuters reported.