Washington called Tuesday for "a holding period" in the Middle East peace process after a deadline for reaching a deal expired with hopes dashed and Israel and the Palestinians bitterly divided.

U.S. Secretary of State John Kerry has no regrets about the energy he poured into his failed Middle East peace bid and is ready to dive back in again if asked, U.S. officials said.

Palestinian leaders risk forfeiting millions of dollars in U.S. aid if they press ahead with plans to form a unity government including militant Hamas members, U.S. lawmakers and officials warned Tuesday.

"Let me be utterly clear about our policy towards Hamas," Assistant Secretary for the Near East Anne Patterson told a House hearing.

Israel on Tuesday accused the U.N. Mideast peace envoy of stoking tensions between Israel and Christians over a dispute that arose during Easter celebrations in Jerusalem.

U.N. envoy Robert Serry said he and other diplomats had joined an Easter procession at the invitation of Jerusalem's Palestinian Christian community but were denied access to the Church of the Holy Sepulcher at a police checkpoint.

Turkish Prime Minister Recep Tayyip Erdogan said he is prepared to normalize ties with Israel within days or weeks after counterpart Benjamin Netanyahu apologized for a deadly raid in 2010.

Erdogan, speaking on U.S. broadcaster PBS late Monday, said U.S. President Barack Obama was instrumental in arranging a phone call between the leaders of Israel and Turkey, which have been at odds since a 2010 Israeli commando raid on a Gaza-bound flotilla of aid ships left nine pro-Palestinian Turkish activists dead.

There can be no peace with Israel without first defining the borders of a future Palestinian state, President Mahmud Abbas said on Tuesday.

"Since the creation of Israel, nobody knows what the borders are. We are determined to know our borders and theirs, without that there will be no peace," he said as Washington's nine-month deadline for reaching a peace deal expired, leaving the process in tatters.

Vandals left anti-Muslim graffiti on a mosque in northern Israel, police said on Tuesday, the latest in a string of racist and religious attacks in the region.

"Unidentified people drew a Star of David and wrote 'close the mosques and open yeshivas' (Jewish seminaries) on the outer wall" of the mosque in Fureidis, police spokesman Micky Rosenfeld told Agence France Presse.

Israel approved plans for nearly 14,000 new settler homes during the nine months of peace talks with the Palestinians, an Israeli settlement watchdog said Tuesday as the negotiation period formally ended. 

Figures quoted by Peace Now showed that during the talks, Israeli Prime Minister Benjamin Netanyahu's government approved at least 13,851 new housing through the advancement of plans and the publication of tenders. 

Speaker Nabih Berri has said that he would discuss with the commander of the United Nations Interim Force in Lebanon, Maj.-Gen. Paolo Serra, alleged Israeli violations of the U.N.-drawn Blue Line in the South.

Israel suddenly claimed that the Blue Line passes in the middle of Wazzani river and that the owners of resorts there can't clean part of the river, Berri told As Safir daily in remarks published on Tuesday.

U.S. Secretary of State John Kerry vehemently denied Monday he had ever called Israel "an apartheid state," amid a row over comments reportedly made during a private meeting.

"Israel is a vibrant democracy and I do not believe, not have I ever stated, publicly or privately that Israel is an apartheid state or that it intends to become one," the top U.S. diplomat said in a strong statement after calls earlier in the day for him to resign or at least apologize for the alleged comments.

Israel's state prosecution is seeking a jail term of five to seven years for former Premier Ehud Olmert who was convicted in March of bribery, a judicial source said Monday.

Olmert was convicted on March 31 on two counts of receiving bribes in connection with a sprawling Jerusalem property development, in one of the biggest corruption scandals in Israeli history.