Pope Francis (R) and Palestinian President Mahmoud Abbas (2nd L) exchange gifts during a private audience at the Vatican. AFP
Abbas, who has met the pontiff several times before, held talks with Secretary of State Cardinal Pietro Parolin and de facto foreign minister Paul Gallagher on a trip to Rome that also included a meeting with Italian premier Mario Draghi.
The Vatican later said, "it was stressed that it is absolutely necessary to reactivate direct dialogue in order to achieve a two-state solution, also with the help of more vigorous effort on the part of the international community".
It "reiterated that Jerusalem must be recognised by all as a place of encounter and not of conflict, and that its status must preserve its identity and universal value as a Holy City for all three Abrahamic religions".
The Israeli coalition led by new hardline nationalist prime minister, Naftali Bennett, has no common position on ending the decades-long Palestinian conflict, complicating any formal diplomatic negotiations.
But recent visits to Abbas by three Israeli cabinet ministers indicate both sides are keen to promote stability and improve ties, even if peace talks remain off the table for now.
At the Vatican Thursday, the pope and Abbas exchanged gifts and then held hands as Abbas wished the pope good health and strength going forward, according to footage released by the Vatican.
In what Vatican News said was their sixth meeting in the Vatican, Abbas gave the pope a representation in amber of the Grotto of the Nativity, an underground cave in Bethlehem where Christians believe Jesus was born.
During his trip, Abbas also met with Italian Prime Minister Draghi and the country's head of state, President Sergio Mattarella.
At their meeting Wednesday, Draghi "expressed his support for a prompt resumption of the bilateral dialogue" and "a just, sustainable and negotiated two-state solution", the prime minister's office said.