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Yahoo! My Yahoo! Mail More Yahoo! Services Account Options New User? Sign Up Sign In Help Yahoo! Search web search Home Singapore Asia Pacific World Business Entertainment Sports Technology Africa Europe Latin America Middle East North America Israel rebuffs criticism on settlements AFP - Thursday, November 19 Send IM Story Print VIDEO: Jewish settlers build West Bank outpost at Maoz Ester. Originally filed: 290609. Duration: 1:47 JERUSALEM (AFP) - – Israel defended on Wednesday its decision to build hundreds of new Jewish homes in annexed Arab east Jerusalem as US President Barack Obama warned the "dangerous" move pushed peace further away. New settlement construction "embitters the Palestinians in a way that could end up being very dangerous," Obama said in an interview with Fox News. "I think that additional settlement building does not contribute to Israel's security. I think it makes it harder for them to make peace with their neighbours," he said. Obama's warning Earlier on Wednesday, Israeli Interior Minister Eli Yishai defended his ministry's decision to build 900 new homes in east Jerusalem that drew international criticism. Israel considers mainly Arab east Jerusalem to be an integral part of its capital, but the Palestinians want to make it the capital of their promised state. "Freezing construction in Gilo is just like freezing construction ... in any other neighbourhood in Jerusalem and Israel," Yishai told AFP. "Construction in Jerusalem cannot be halted, and Gilo is in Jerusalem." Gilo is one of a dozen Jewish settlements in the eastern part of the Holy City, which Israel has annexed in a move not recognised by the international community. Israeli news reports said Prime Minister Benjamin Netanyahu had rejected a request from US ally to halt construction in Gilo, but it was not clear whether the request concerned the project approved on Tuesday night. Only hours after the decision was announced, White House spokesman Robert Gibbs said he was "dismayed." "At a time when we are working to relaunch negotiations, these actions make it more difficult for our efforts to succeed," Gibbs said. Russia slammed the expansion as "unacceptable for the Middle Eastern peace process." The move is likely to further hamper Washington's so far futile efforts to get Israel and the Palestinians to restart peace talks, which were suspended during the Gaza war at the turn of the year. In another move likely to exacerbate tensions, Israel demolished a Palestinian house in east Jerusalem. Palestinians often build in east Jerusalem without permits because these are nearly impossible to get. The European Union, United Nations, Britain, France and Saudi Arabia added their voices to the criticism of the decision to expand Gilo, a move that flew in the face of Palestinian calls for a complete freeze on all settlement activity for peace talks to resume. The EU presidency stressed that "settlement activities, house demolitions and evictions in east Jerusalem are illegal under international law." EU dismay at settlement decision French Foreign Minister Bernard Kouchner, who was holding talks with Israeli leaders in Jerusalem on Wednesday, said: "It is a decision that we regret." Speaking one day after he held talks with Palestinian president Mahmud Abbas in Amman, Kouchner also said it was urgent that negotiations should resume between Israelis and Palestinians. "Abbas is determined to return to a process of political dialogue," he said. "That is the urgency." But UN chief Ban Ki-moon said the decision to build new homes in Gilo "undermined efforts for peace and cast doubt on the viability of the two-state solution." Britain called the decision "wrong." The Palestinians' chief negotiator Saeb Erakat accused Israel of "making a mockery of existing agreements and sabotaging all prospects for a return to genuine negotiations." Israel captured east Jerusalem during the 1967 Six-Day War and later annexed it. It views the entire Holy City as its "eternal, indivisible" capital and does not consider Jewish neighbourhoods in the eastern sector as settlements. Meanwhile, a group of visiting US Jews on Wednesday laid a symbolic cornerstone of a new Jewish neighbourhood in east Jerusalem. "I'm sending a message to President Obama -- leave Jerusalem alone," Danny Danon, an MP with Netanyahu's Likud faction, said at the ceremony. 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