EU presidency welcomes Netanyahu's speech

The presidency of the European Union today welcomed Israeli Prime Minister Benjamin Netanyahu's Sunday speech giving his endorsement - albeit with conditions - to a Palestinian state.

"In my view, this is a step in the right direction. The acceptance of a Palestinian state was present there," Czech Foreign Minister Jan Kohout, whose country holds the EU's rotating six-month presidency, told reporters.

Foreign Minister Carl Bildt of Sweden, which will take over the EU presidency in July, called it "a small step forward".

"That's good but it's only a first step," he said ahead of a meeting of EU foreign ministers in Luxembourg. "A state can't be defined as anything...the fact that he uttered the word is a small first step."

Finnish Foreign Minister Alexander Stubb, when asked if Netanyahu's move was sufficient for the EU to upgrade ties with Israel, said: "No".

The 27-nation European Union has linked an unfreezing of plans to upgrade links with Israel to Netanyahu committing to negotiate a two-state accord. Officials of the bloc were due to meet Israeli Foreign Minister Avigdor Lieberman in Luxembourg later on Monday.

Netanyahu, who has refused to back a state for Palestinians since taking office in March, said on Sunday he would endorse establishment of a such a state - but only if Israel received in advance international guarantees the new nation would have no army and Palestinians recognised Israel as a Jewish state.

And his defence of Jewish settlement on occupied land may fail to dispel tensions with critics.

Obama called Netanyahu's shift on Palestinian statehood an "important step forward" but aides to Palestinian President Mahmoud Abbas denounced the speech as "sabotaging" negotiations by restating Israel's refusal to share the city of Jerusalem or accept Palestinian refugees.