Rice met Palestinian negotiators Ahmed Qurie and Saeb Erekat and was due to see Israeli Defence Minister Ehud Barak and Foreign Minister Tzipi Livni on the last day of a two-day visit to Israel and the occupied West Bank.

U.S. officials said Rice would urge Israel to try harder to avoid harming innocent people in Gaza, where medical workers said about half of the more than 120 Palestinians killed in a recent Israeli offensive were civilians.

Israel argues that Hamas bears responsibility for civilian deaths because its gunmen launch rockets from heavily populated areas into the Jewish state.

Palestinian President Mahmoud Abbas, whose Fatah faction lost control of the Gaza Strip to Hamas in fighting last June, suspended statehood talks with Israel on Sunday in protest at the bloodshed in the territory.

Israel ended a five-day operation in the Gaza Strip on Monday but threatened to send its forces back in if militants pressed on with cross-border rocket attacks.

Rice came away from talks with Abbas on Tuesday without any public commitment from the Palestinian leader to resume negotiations with Israel.

But she said she still expected both sides to reach a peace deal before U.S. President George W. Bush leaves office in January.

CALMER SITUATION

U.S. officials said they understood it was not politically feasible for Abbas to announce during Rice's visit that talks would resume, and there needed to be a calmer situation on the ground and greater assurances from the Israelis.

But they said they expected Abbas to restart negotiations soon.

There is scepticism among Middle East experts that a deal on core issues that no other U.S. presidents have been able to overcome -- the status of Jerusalem, borders, refugees and security -- can be achieved by year's end.

Both sides are divided on the scope of an agreement. Abbas wants a full accord. Israeli Prime Minister Ehud Olmert has spoken of reaching basic understandings.

The U.S. officials said Rice also planned to put pressure on the Israelis to cede to Palestinian demands and ease conditions of the ground in the Israeli-occupied West Bank.

Palestinians complain that Israel is not sticking to commitments to relax security checkpoints and other restrictions in the West Bank, making it hard for the pro-Western Abbas to argue that the talks are bringing rewards.

"The situation on the ground needs to improve," said a U.S. official as Rice went into her final flurry of meetings before leaving for Brussels for a meeting of NATO foreign ministers.

Israel says its restrictions on Palestinian movement in the West Bank are dictated by security concerns. It frequently mounts raids into the territory against militants, saying such operations prevent attacks on Israelis.

In violence in the Gaza Strip late on Tuesday, Israeli forces killed a senior Islamic Jihad militant, the Israeli army said. Local medical workers said a Palestinian infant was also killed in the incident.