JERUSALEM — Israel on Wednesday dismissed mounting pressure to stop building homes for Jewish settlers in annexed east Jerusalem, with Foreign Minister Avigdor Lieberman saying the demands were "unreasonable."
Despite the controversy over the settlements, President Barack Obama later Wednesday denied there was a crisis in US-Israeli relations.
The comments came as Israel and Washington seek to tone down a diplomatic row which erupted over new settlement plans announced last week while US Vice President Joe Biden was in the region to renew peace efforts.
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"This demand to forbid Jews from building in east Jerusalem is totally unreasonable," Lieberman said at a joint news conference with visiting EU foreign policy chief Catherine Ashton.
"I think that this demand, it comes, in many ways, as an opportunity for the international community to jump on Israel and apply pressure to Israel and to demand things that are unreasonable," the right-wing minister said.
In an interview with Fox News in the United States, Obama answered "no" when asked whether there was a crisis between the allies.
He said that both Israel and the Palestinians had a responsibility to avoid moves that would thwart the US bid to revive peace talks.
On the eve of Middle East Quartet talks in Moscow, Israel and the Palestinians, meanwhile, accused each other of hampering the already hobbled peace process.
But tensions eased in Jerusalem as Israel reopened the flashpoint Al-Aqsa mosque compound one day after the Holy City saw the heaviest Palestinian rioting in years with dozens of police and protesters injured.
Israeli police, however, remained on high alert in and around the Old City where the mosque compound, the holiest site for Jews and the third holiest for Muslims, is located.
A few dozen Palestinian youths hurled rocks at security forces who responded by firing rubber-coated bullets in the Qalandia refugee camp in east Jerusalem.
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Later on Wednesday, violence flared again at nearby Shuafat, where Palestinian youngsters stoned police who responded with "riot dispersal equipment," police spokesman Shmuel Ben-Ruby said, without elaborating.
He said there were no injuries or arrests.
In the coastal town of Jaffa, adjacent to Tel Aviv, Israeli Arabs protested in solidarity with their Jerusalem brethren, carrying signs reading "Free Palestine."
Local media reported that some of the demonstrators threw stones at city buses, but again without reports of injuries or arrests.
In the West Bank, medics said three people were wounded when Israeli troops fired rubber bullets at Palestinians hurling stones near Nablus, while the army sealed off several roads in and around Hebron after brief clashes in that city.
The military reported two cases of molotov cocktail attacks on vehicles driven by Israelis near West Bank settlements and said another Israeli driver's car was stoned. There were no casualties.
But Israel lifted the complete lockdown on the occupied West Bank it had imposed almost one week earlier.
In southern Israel, a rocket fired from the nearby Gaza Strip crashed into open ground, causing no casualties or property damage, the Israeli military said.
Tensions have also soared over the opening of a rebuilt 17th century synagogue in the Jewish quarter of the Old City, a few hundred metres (yards) from the mosque compound.
Israel's announcement of plans to build 1,600 new homes for Jewish settlers in mainly Arab east Jerusalem had already fuelled tension and sparked a row with the United States.
Washington, frustrated over a lack of progress in its peace brokering, reacted angrily to the announcement although senior US officials have since appeared eager to patch up relations.
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Prime Minister Benjamin Netanyahu spoke on Tuesday night with Biden, sources in his office said.
Israeli Defence Minister Ehud Barak's office issued a statement late Wednesday saying that Barak spoke by phone to US Mideast envoy George Mitchell and the two "discussed various ways and options to resolve the crisis."
The statement said the two men also discussed the possibility of Mitchell returning to the region on Sunday but it did not say if a decision was reached.
Secretary of State Hillary Clinton was still waiting on Wednesday for a response from Netanyahu about US complaints over settlements, the US State Department said after her departure from Washington headed for Russia.
Clinton is to attend the Middle East diplomatic Quartet meeting in Moscow.
Netanyahu convened his forum of seven senior cabinet ministers late Wednesday night, for the third time in a day, for talks that officials said were about the chill in relations with Washington and how to respond to Clinton.
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