2nd Ld-Writethru: Trump calls on Netanyahu to "hold back" on new settlement

Israel should "hold back" on building new settlement "for a little bit," U.S. President Donald Trump told visiting Israeli Prime Minister Benjamin Netanyahu on Wednesday.

"As far as settlements, I'd like to see you hold back on settlements for a little bit. We'll work something out but I would like to see a deal be made," Trump said at a joint press conference with Netanyahu at the White House before their meeting.

In response, Netanyahu played down the issue of settlement building.

"I believe that the issue of the settlement is not the core of the conflict, nor does it really drive the conflict. I think it's an issue that has to be resolved in the context of peace negotiations," Netanyahu said.

Israel approved last month the construction of 3,000 housing units in West Bank settlements, amidst a spate of settlement expansion in the wake of Trump's inauguration.

Israel's settlement-building in disputed territory is a major dispute between the Israelis and Palestinians. The settlements are illegal under international law because they are built on lands seized by Israel in the 1967 Mideast War, where the Palestinians wish to form their future state.

The former U.S. administration criticized Israel's continuous expansion of the settlements, which it considered as a major obstacle to peace.

In a White House statement earlier this month, the Trump administration said "the construction of new settlements or the expansion of existing settlements beyond their current borders may not be helpful" in achieving Middle East peace.

On Wednesday, Trump also said that he is open to either a one-state or two-state solution to the Israeli-Palestinian conflict, a departure from U.S. stance in previous administrations.

"I'm looking at two-state, one-state, and I like the one that both parties like. ... I can live with either one," Trump said.

The previous U.S. administrations have pushed for the two-state solution to the Middle East peace process, an idea of establishing an independent Palestinian state that lives side-by-side with Israel.

On another controversial issue of moving U.S. embassy from Tel Aviv to Jerusalem, Trump said, "as far as the embassy moving to Jerusalem, I'd love to see that happen. We're looking at it very, very strongly."

But he added that the U.S. is looking at the issue "with great care."

Israel claimed all of Jerusalem as its "eternal and undivided capital." But the international community has never recognized East Jerusalem, a territory Israel seized in the 1967 Mideast War and later annexed.

The Palestinians see East Jerusalem as the capital of their future state.

The idea of moving the U.S. embassy to Jerusalem was discussed in the past but never carried out for fear it will spark fresh tensions in the region. Enditem