Washington  - US President Barack Obama said Monday there was some "positive movement" towards peace after Israeli Prime Minister Benjamin Netanyahu recognized the Palestinians' right to an independent state.

But Obama made clear he would not back down from his demand that Israel stop all settlement activity, a key disagreement that remains between the two long-time allies.

In a major policy speech Sunday, Netanyahu for the first time backed the creation of a Palestinian state, which had been another key source of tension between Obama's administration and Israel.

But Netanyahu's offer came with a series of conditions, including demilitarizing the West Bank and an undivided Jerusalem, that were quickly rejected by the Palestinian Authority and Arab states.

Overall, I thought there was some positive movement," Obama said of the speech, after a meeting with Italian President Silvio Berlusconi at the White House. "What we are seeing is at least the possibility we can restart serious talks."

Netanyahu fell short of Obama's demand to stop all settlement activity. While Netanyahu promised no new settlements in the West Bank, he said Israel would continue to support "natural growth" in existing settlements.

Obama said both sides would still have to take steps to make peace a possibility. For Israel, that means a cessation of settlements." For Palestinians, it signifies "an end to violence" against Israel. (dpa)