The European Union said Monday it deplored Israeli plans to build new settlements on the occupied Palestinian territory but denied outright that it planned sanctions against Israel as a result.
There was "no plan of this type," new EU foreign affairs head Federica Mogherini said when asked about an Israeli press report on the issue.
"I saw an article in Haaretz which apparently referred to an internal working document requested by some member states some time ago," Mogherini told a press conference after chairing her first regular EU foreign ministers meeting.
"They were only a working hypothesis, did not go to ministers and today they were absolutely not part of our discussion," she said.
She added: "Our discussions today were all about getting a positive engagement with Israel and the Palestinians so as to restart the peace process; they were not about isolating or sanctioning anyone."
A statement issued after the foreign ministers meeting said the 28-member bloc "deeply deplores and strongly opposes the recent expropriation of land near Bethlehem, recent announcements of plans for new settlement construction... as well as plans to displace Bedouins in the West Bank and the continued demolitions, including of EU and member states funded projects."
Israel should reverse these decisions which "run counter to international law and directly threaten the two state (peace) solution," it said.
Israeli Prime Minister Benjamin Netanyahu has regularly dismissed such EU statements and on Sunday, his foreign minister was even blunter.
"One thing should be clear: we will never accept the definition of building in Jewish neighbourhoods of Jerusalem as settlement activity," Foreign Minister Avigdor Lieberman said.
"We won't accept any limitation on building in Jewish areas of (east) Jerusalem," he said.
The status of Jerusalem is a flashpoint issue, with Palestinians wanting the eastern half as their future capital and Israeli occupation authorities claiming it as their undivided and eternal capital city.
The EU foreign ministers said they were "gravely concerned" at growing tensions on the ground and called on both sides to avoid provocative actions, especially over holy sites.
They also voiced concerned at the "dire humanitarian situation in the Gaza Strip" after the latest conflict earlier this year left a trail of destruction.
"The EU calls for a fundamental change of the political, security and economic situation in the Gaza Strip, including the end of the closure," the statement said.
"A return to the status quo prior to the latest conflict is not an option," it said, adding that the 28-member bloc, a key aid donor, was ready to do all it could.
Ministers agreed that future relations with both Israel and the Palestinians would depend on their "engagement towards a lasting peace," the statement concluded.
*The story was edited by Ahram Online.