US Secretary of State convinced peace deal still possible and necessary, despite everything.

US Secretary of State Hillary Clinton said Wednesday that a peace deal in the Middle East was still possible and necessary, despite a renewed row over Israeli construction on the Palestinian-occupied land.

Clinton told reporters in a joint video conference with Palestinian Prime Minister Salam Fayyad Israel's recently announced plan to construct 1,300 homes in occupied Jerusalem and 800 more in the West Bank settlement of Ariel was counterproductive to peace negotiations.

Nevertheless, she said, the United States was continuing to work to resume the stalled negotiations. "This announcement was counterproductive to our efforts to resume negotiations between the parties," Clinton told reporters, but renewed belief that a positive outcome is both possible and necessary.