U.S. President Barack Obama said Wednesday the possible Palestinian drive for national recognition at the United Nations was a "mistake", in his most direct criticism yet of the campaign.

Obama also urged Israel and the Palestinians to make "wrenching compromise" for a peace deal after a week of acrimony left prospects of a final settlement more distant than ever.

Palestinian leader Mahmoud Abbas on Wednesday slammed a speech by Israel's prime minister and said the Palestinians would seek U.N. recognition if peace talks don't resume.

"Our first choice is negotiations, but if there is no progress before September we will go to the United Nations," Abbas said, criticizing a speech by Israeli premier Benjamin Netanyahu to the U.S. Congress on Tuesday.

The United States on Tuesday announced it is imposing sanctions against seven foreign firms, including Venezuelan, Singaporean, and Israeli companies, as part of efforts to check Iran's nuclear ambitions.

It also imposed sanctions against 16 other foreign firms and individuals, including from China, over trade with Iran, Syria and North Korea in goods or technology that may be used for weapons of mass destruction or missiles.

Free Patriotic Movement leader MP Michel Aoun criticized on Tuesday Prime Minister-designate Najib Miqati’s performance so far in forming a government, accusing him of wasting his time and not wanting to form the Cabinet.

He said after the FPM’s weekly meeting: “We have presented all we can to facilitate its formation, but the premier-designate does not want it to be established.”

President Michel Suleiman congratulated on Tuesday the Lebanese and Resistance on the occasion of Liberation Day, saying that the liberation of the South demonstrated that Lebanon has the popular capabilities to liberate its land and defeat the enemy.

He stressed: “The Israeli defeat has made it think twice before executing any attack on Lebanon.”

Palestinian authorities do not intend to declare unilateral independence, a top Fatah member said Tuesday following talks with senior Russian officials.

"We do not intend to unilaterally declare independence," Fatah member Azzam al-Ahmed said one day after meeting Russian Foreign Minister Sergei Lavrov.

Israeli Prime Minister Benjamin Netanyahu Monday vowed that the Jewish state would never withdraw to the "indefensible" 1967 border, revisiting a spat over the issue with U.S. President Barack Obama.

Netanyahu told the powerful pro-Israel lobby said he would spell out his vision for peace with the Palestinians in a speech to Congress on Tuesday, but promised that would not include a withdrawal to lines that existed before the 1967 Six Day War.

The European Union, welcoming U.S. President Barack Obama's Middle East policy shift, Monday called for an "early meeting" of the Quartet group of world powers seeking an Israeli-Palestinian peace deal.

It also welcomed the recent reconciliation between rival Palestinian leaders from Fatah and Hamas and reiterated readiness to recognize a Palestinian state "when appropriate".

U.S. President Barack Obama vowed Sunday to "keep up pressure" on Iran to prevent it from obtaining nuclear weapons and forcefully defended his call for an Israeli-Palestinian peace based on pre-1967 frontiers, suggesting critics had misrepresented him.

Outlining U.S. and U.N. sanctions imposed on Iranian President Mahmoud Ahmadinejad's regime, Obama said Iran is now "virtually cut off from large parts of the international financial system."

Israeli Prime Minister Benjamin Netanyahu said Sunday he shared U.S. President Barack Obama's vision for peace in remarks appeared aimed at defusing a deepening row with the U.S. leader.

"I am partner to the president's desire to foster peace and I value his efforts in the past and the present to achieve this goal," said Netanyahu, reacting to Obama's speech to the main pro-Israel lobby in Washington.