Israeli Prime Minister Benjamin Netanyahu told President Obama at a White House meeting Monday that he wanted to resume peace negotiations with the Palestinians, but he stopped short of embracing the U.S. view of a fully sovereign Palestinian state.

The Israeli leader said he wanted Palestinians to govern themselves, but without "a handful of powers that could endanger the state of Israel."

Netanyahu has long insisted that any Palestinian state forgo the common trappings of statehood, including its own military, control over its borders and authority over electronic communications.

The first White House meeting between Obama and Netanyahu was much anticipated, in part because of expectations of possible friction between the conservative Israeli leader and the new U.S. president, who has said that bringing about a peace deal will be one of his top priorities.

Addressing reporters after their talks, the two leaders exchanged praise and described shared goals. But it was clear after the four-hour meeting that they remained far apart on key issues.

For instance, Obama emphasized that Israel must halt growth of Jewish settlements in the West Bank in order to reach a peace accord. But Netanyahu said nothing on the subject in an exchange with reporters in the Oval Office.

Speaking later with Israeli journalists, Netanyahu indicated that Israeli action on settlements would depend on Palestinian cooperation in other areas, the Ynet news organization in Israel reported.

Obama, whom Israel has been pressing to set a deadline for his outreach initiative to Iran, said for the first time that the administration would try to decide by the end of the year whether to continue the effort. By then, he said, "we should have some sense of whether these discussions are starting to yield serious benefits."

Still, Obama insisted that is only a general timetable. "That doesn't mean every issue would be resolved at that point," he said. "I don't want to set an artificial deadline."

The Israeli and U.S. governments allege Iran is trying to develop nuclear weapons; Tehran insists its nuclear effort is a civilian energy program.

After the meeting Netanyahu appeared to soften his insistence that the issue of Iran's nuclear program take precedence over talks with the Palestinians. He said the two matters should be tackled at the same time, "in parallel."

Obama, however, continued to say a Palestinian settlement must take precedence. Settling that, he said, could help defuse any possible Iranian threat.

Obama prodded Israel to ease restrictions on allowing construction materials into Gaza, to enable rebuilding there after Israel's offensive in December-January. Israel is limiting the flow of most goods, saying it fears some materials could be used by militants.

The Gaza blockade is a sensitive topic that U.S. officials have avoided discussing publicly. But Obama said that if Israel's control of the borders was "so tight that it is impossible for reconstruction and humanitarian efforts to take place, then that is not going to be a recipe for Israel's long-term security."

Netanyahu praised Obama as a "great leader" and in turn, Obama complimented Netanyahu, in a way that appeared designed to enlist him in his peace mission.

Obama said he had "great confidence" in Netanyahu's "historical vision. . . . I have great confidence that he's going to rise to the occasion."

White House aides and Israeli officials said there was good chemistry between the two, evidenced by the length of their talk. "The president believes these were warm discussions and we're making progress," said Robert Gibbs, the White House press secretary.

Avi Panzer, a Netanyahu advisor in Jerusalem who was briefed by colleagues in Washington, said the fact that the two leaders "sat for so long without advisors denotes a serious attempt to reach common ground."

Saeb Erekat, the Palestinians' chief peace negotiator, said he was "extremely disappointed" that Netanyahu didn't discuss the Palestinian state, the Jewish settlements issue or the validity of previous agreements designed to lead to a separate state.

Erekat noted that while Netanyahu had said he wanted to negotiate, he did not indicate the talks would be on the so-called final-status agreements to resolve the conflict.

Experts cautioned that the public statements of leaders frequently do not reflect their private meetings, and predicted that later disclosures could cast the meeting in a different light.

Daniel Levy, a former Israeli peace negotiator now with the New American Foundation in Washington, said one key question was what impression of Obama Netanyahu took away.

"Did he see him as a rookie pushover . . . or as a serious guy who's determined to move forward?"