Palestinian president Mahmud Abbas had repeatedly warned he would abandon the fledgling US-backed negotiations with Israel should the Jewish state keep constructing settlements on occupied Palestinian land.

But Israeli Prime Minister Benjamin Netanyahu refused to extend the moratorium on new settler homes in the occupied West Bank, which formally ended at midnight (2200 GMT Sunday).

The United States said it was "disappointed" the 10-month moratorium expired, and announced its envoy to the Middle East, George Mitchell, was on his way to the region in a bid to resolve the "dilemma."

As bulldozers across the West Bank lumbered into action on Monday, Abbas said he would consult his Fatah movement and the Palestine Liberation Organisation this week and meet with Arab foreign ministers on October 4.

"After all these meetings we may be able to issue a position to clarify what is the Palestinian and Arab opinion on this matter," Abbas said.

Netanyahu has urged Abbas to stick with the talks, which were launched on September 2 after a 20-month hiatus.

US State Department spokesman PJ Crowley praised Abbas for not immediately backing out of the negotiations, saying his "restraint at this point is appreciated."

He added however: "We are disappointed, but remain focused on our long term objectives."

"We recognise that given the decision yesterday we still have a dilemma to resolve," Crowley said. "One way or the other the parties have to find a way to continue direct negotiations.

Britain and the European Union joined France and the United Nations by expressing regret about Israel's decision.

"I am very disappointed to hear that the moratorium has not been renewed," British Foreign Secretary William Hague said.

EU foreign policy chief Catherine Ashton voiced "regret" and said Brussels was "examining the consequences of this decision."

Earlier, French President Nicolas Sarkozy sharply criticised the Israeli decision. "I deplore this," Sarkozy told a joint news conference with Abbas after talks in Paris.

UN Secretary General Ban Ki-moon also expressed disappointment about Israel's refusal, and concern at what he called "provocative actions taking place on the ground," his spokesman said.

Turkey hit out at its one-time ally Israel, with Foreign Minister Ahmet Davutoglu saying the settlement activity was "not an indication of goodwill to have a peace."

"We urge Israel to stop settlements, to extend the moratorium and... invite and urge the Palestinian side to continue negotiations toward a vision of peace," Davutoglu said in New York.

But the Islamist Hamas movement, which rules Gaza, called on Abbas to stand by his threat to end the negotiations.

"I call on my brothers at the Palestinian Authority, who had stated they would not pursue talks with the enemy (Israel) if it continued settlement construction, to hold to their promise," its exiled chief Khaled Meshaal said.

On Monday, settlement construction was under way at Yitzhar and Ariel in the northern West Bank, Adam north of Jerusalem, and Kohav HaShahar and Shaar Benyamin near the West Bank town of Ramallah.

A carnival-like atmosphere prevailed as about 15,000 Israelis gathered in a flashpoint settlement in the heart of the southern West Bank city of Hebron, although most were ultra-Orthodox celebrating the Jewish holiday of Sukkot.

"Today we are one day after the freeze, a move I always opposed and said was a bad idea," Silvan Shalom, a minister from Netanyahu's Likud party, told the crowd.

"I said that 10 months was too much. One day was too much."

There were no reports of any major construction taking place, in part because of Sukkot, or the Feast of Tabernacles, during which Jews are not supposed to work.

Just before the freeze ended, Netanyahu urged settlers to display "restraint and responsibility."

"We are building, but quietly," settler leader Zvi Katzover told AFP in Hebron.

"We hope it is really over and not just a trick... We are very suspicious, but we hope that we can still build and build big, like we used to."

The Palestinians have long deplored the presence of 500,000 Israelis in more than 120 settlements scattered across the West Bank and annexed east Jerusalem, lands expected to form the bulk of a future Palestinian state.

The international community views all settlements as illegal.

earlier related report
Settlers start building but Palestinians silent -- for now
Jerusalem (AFP) Sept 27, 2010 - Settlement building resumed across the West Bank on Monday just hours after a 10-month freeze expired, but the Palestinian leadership held back on a threat to quit peace talks with Israel over the move.

Palestinian president Mahmud Abbas had repeatedly warned he will turn his back on direct negotiations with Israel should the Jewish state continue building on occupied Palestinian land.

But, despite weeks of international pressure, Israel's hardline premier Benjamin Netanyahu made no move to extend the moratorium on new building in the West Bank, which formally ended at midnight.

As bulldozers across the West Bank lumbered into action early on Monday, Abbas told reporters in Paris he would defer a decision on whether to continue talks with Israel until he meets top Arab diplomats on October 4, his spokesman said.

"Before October 4 there will not be an official Palestinian answer," said Nabil Abu Rudeina shortly before Abbas met with French President Nicolas Sarkozy.

"We are in continuous contact with the US administration and US efforts are continuing, but we are waiting for a final Israeli position so that we can form a clear and final response," he said.

"Our position is clear and obvious. We are ready for serious negotiations, but the settlement activity should stop immediately. This is the only way to continue fruitful talks."

Just minutes after midnight, Netanyahu had appealed to Abbas to stick with the talks, which were launched earlier this month.

"I call on president Abbas to continue with the good and honest talks we have just embarked upon, in an attempt to reach a historic peace agreement between our two peoples," he said.

Abbas responded immediately, saying: "Netanyahu must take a decision to freeze the settlements in order to create an appropriate atmosphere to proceed with the peace talks," Abu Rudeina quoted him as saying.

Shortly after sunrise, building work began in around a dozen small settlements, albeit on a modest scale.

AFP correspondents saw an earthmover breaking new ground on the outskirts of Adam settlement, north of Jerusalem, and another digger preparing the foundations for several dozen housing units in Kohav HaShahar northeast of the city of Ramallah.

A bulldozer was also seen moving earth in Shaar Binyamin near Ramallah.

Construction was due to start in at least seven other settlements, including in the flashpoint enclave of Kiryat Arba, where 600 extreme rightwing settlers live in the heart of the southern city of Hebron, Channel 2 television and Haaretz newspaper said.

The expiry of the moratorium means that anyone who obtained a permit to build prior to the freeze can now go ahead and start working.

However, for practical reasons, no major construction was taking place -- largely due to the ongoing Jewish festival of Succot, the Feast of Tabernacles, during which Jews are not supposed to work.

And as a result of the blanket closure imposed on the West Bank until the holiday ends on Thursday night, Palestinian construction workers -- thousands of whom earn a living by building settlements -- will not be able to return to work until October 3, after the weekend.

A wide-scale resumption of settlement construction would almost certainly force Abbas to quit talks, but Israel is hoping that he would tolerate low-key construction.

Washington is also keeping up pressure on Netanyahu to reimpose the settlement freeze, with a State Department spokesman saying efforts to that end would continue.

"We remain in close touch with both parties and will be meeting with them again in the coming days," said PJ Crowley.

Just before the freeze ended, Netanyahu urged the settlers to keep a low profile as they start building again, and called on them to display "restraint and responsibility."

"We are getting back to business as usual and building but we will respect the prime minister's request," said David Ha'ivri, a settler leader in the northern West Bank.

Settler sources told AFP they had been given the nod from Netanyahu's office to start building -- but on condition they "don't make a big deal of it."

Jewish settlement on occupied Palestinian land is one of the most bitter aspects of the conflict. Currently, around 500,000 Israelis live in more than 120 settlements across the West Bank and east Jerusalem, territories the Palestinians want for their promised state.

A previous round of direct talks collapsed in December 2008 when Israel launched a war on the Gaza Strip aimed at halting rocket attacks.

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