Washington shifts focus on Jerusalem.

Agencies <p>CAIRO: Middle East peace talks must include the disputed city of Jerusalem, US Secretary of State Hillary Clinton said in Cairo on Wednesday, stressing Washington is determined to push for a Palestinian state.

"There is no doubt that moving toward a state that reflects the aspirations and the rights of the Palestinian people must include all of the issues that have been discussed and mentioned by President Barack Obama, and that includes Jerusalem," she said.

"We want to assure you that our goal is a real state, with a real sovereignty," she added at a joint press conference with Egyptian Foreign Minister Ahmed Aboul Gheit.

"Nothing can interfere with our commitment and our resolve to move forward, and there are impediments, yes, but we cannot let anything deter us," she said. Clinton extended a regional trip at the last minute to meet Egyptian President Hosni Mubarak after creating a storm by praising an Israeli plan to restrict settlement construction on the occupied West Bank.

The secretary of state said on Wednesday that the settlements were illegitimate but again described the plan as "unprecedented." "Our policy on settlement activity has not changed. We do not accept the legitimacy," she said, adding that the Israeli offer, which would allow a limited expansion of the settlements, was "not what we prefer."

But "what we have received from the Israelis ... is unprecedented," she said. "It's a positive movement ... just like the Palestinians made progress on security," she said.

Aboul Gheit, who had said Cairo wanted Clinton to clarify her remarks on the settlements during her visit, described his and Mubarak's meetings with her as "very useful." He blamed Israel for stalling the peace process but appeared to suggest a softening of Egyptian support of the Palestinians' refusal to resume talks in the absence of a settlement freeze. "Israel is putting conditions to start negotiations by continuing to hold on to settlement activity," the foreign minister told reporters.

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