JERUSALEM – Palestinians clashed with Israeli forces in Jerusalem on Tuesday as the United States, which has slammed Israeli settlement plans as undermining peace efforts, played down strains in its alliance with the Jewish state.

Though a U.S. mediator deferred a visit to usher in indirect negotiations, Secretary of State Hillary Clinton saw progress within days and said the Obama administration was talking to the Israelis on how they might demonstrate their commitment.

Israeli Prime Minister Benjamin Netanyahu welcomed the American overture but said the onus was on the Palestinians.

Israel angered Palestinians and touched off the feud with Washington by announcing plans, during a visit last week by Vice President Joe Biden, to build 1,600 homes for Jews in a part of the occupied West Bank it had annexed to Jerusalem.

That, along with the rebuilding of an 18th-century synagogue in Jerusalem's Old City, drew hundreds of Palestinian protesters to face off with Israeli riot police in scenes recalling the outbreak of the Palestinian revolt that began in 2000.

"We have come to throw stones because that's all we have and the situation in Jerusalem is dangerous," one demonstrator said during a confrontation at an Israeli military checkpoint.

Medics said at least 40 Palestinians and 15 Israeli police were injured in East Jerusalem, which Israel captured, along with the adjacent West Bank, from Jordan in a 1967 war. Palestinians want a state in those territories, and in Gaza.

One of the injured policemen was shot in the hand by an unidentified gunman, police said. About 60 people were arrested.

It was the worst flare-up in the holy city in months and another challenge to President Barack Obama's efforts to revive Israeli-Palestinian talks, suspended since December 2008.

The settlement dispute was described by Israel's envoy in Washington as a crisis of historic proportions in traditionally close bilateral relations.

Yet Clinton, who had complained about Israel's "insulting" conduct, was more conciliatory on Tuesday.

"We have an absolute commitment to Israel's security. We have a close, unshakeable bond," she told a news briefing, in remarks echoed by the White House.

Clinton said both allies were committed to a two-state solution for Israel and the Palestinians, adding: "we don't agree with any of our international partners on everything."

Awaiting word

Obama's envoy, George Mitchell, had been due in the region on Tuesday but canceled after Netanyahu said he would not halt construction in what he termed Jerusalem neighborhoods, disputed areas in and near the city's eastern sectors.

"I think we'll see what the next days hold and we're looking forward to Senator Mitchell returning to the region and beginning the proximity talks," Clinton said.

Spokesman P.J. Crowley said Mitchell would not meet Israeli and Palestinian officials before a gathering in Moscow on Thursday and Friday of international Middle East mediators.

Clinton had made demands of Netanyahu about the settlement project and about showing peacemaking commitment, Crowley said, adding: "We do expect to have the Israeli response shortly."

Israeli media said Clinton had sought the cancellation of the project and for Israel to agree to discuss statehood issues with the Palestinians, who want East Jerusalem as their capital.

Israel says such demands stymie any start to peacemaking.

"The Israeli government has proved over the past year its commitment to peace, both in words and deeds," Netanyahu said in a statement responding to the new remarks out of Washington. "By contrast, the Palestinians are posing preconditions for renewing the diplomatic process in a way they have not done over the course of 16 years," it said.

Netanyahu has voiced regret at the timing of the settlement announcement but said there was consensus in Israel that homes for Jews should be built anywhere in Jerusalem, a city it considers its capital though that claim is not upheld abroad.

"There is an explosive situation. There are Netanyahu's policies, which are tantamount to pouring oil on fire," said Palestinian chief negotiator Saeb Erekat.

The Islamist group Hamas, which controls the Gaza Strip and preaches the Jewish state's destruction, said in a statement Palestinians should regard Tuesday as "a day of rage against the Occupation's procedures in Jerusalem against al-Aqsa mosque."

Hamas leaders referred to the renovation of the Hurva synagogue in the Jewish Quarter of Jerusalem's walled Old City, saying the work was an Israeli plot to demolish al-Aqsa mosque, Islam's third holiest site about 400 meters (yards) away.

Israel denied the allegation and Washington, appealing for calm, voiced concern at what it called Palestinian incitement.

About 500,000 Jews and 2.6 million Palestinians live in the West Bank and East Jerusalem. Palestinians say settlements will deny them a viable state and Washington has warned both sides against moves that could prejudge the outcome of peace talks.