UN Secretary-General Ban Ki-moon on Sunday expressed concern over the deadlock in Israeli-Palestinian talks and stressed the importance of creating the right conditions for the two sides to build sufficient mutual trust to resume negotiations.

"It is vital that a sovereign State of Palestine is achieved," the UN chief said in a message marking the International Day of Solidarity with the Palestinian People, which is observed annually on Nov. 29.

"This should be on the basis of the 1967 lines with agreed land swaps and a just and agreed solution to the refugee issue -- a State that lives side-by-side in peace with Israel within secure and recognized borders," Ban said.

But the secretary-general noted that while Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas have publicly committed to a two-state solution, formal talks have been suspended for almost a year.

"I support the clear commitment and efforts of the United States to bring about a resumption of meaningful negotiations on all final status issues, including the security of Israelis and Palestinians, borders, refugees and Jerusalem," he said.

"The biggest challenge to this shared agenda is to create the conditions in which the parties have the trust and confidence to return to genuine and substantive talks," he said.

At the same time, Ban welcomed the "significant progress" made by the Palestinian Authority in meeting its obligations under the Roadmap, the internationally backed plan for achieving Middle Eastpeace, in the West Bank.

"I call on all Palestinians to fight violent extremism and to refrain from incitement, and to continue their unyielding struggle to build their own State institutions," he said. "These efforts have resulted in economic and security improvements, which should be sustained and extended."

To that end, Ban said that he welcomed initial steps by Israel to "contribute to these positive trends," and he called on the country's authorities "to expand these measures so that change can become truly transformative."

But he said he was deeply concerned that illegal settlement construction continues in East Jerusalem and the remainder of the West Bank, and he reiterated earlier calls on Israel to freeze all settlement activity, including the so-called "natural growth," and to dismantle outposts erected since March 2001.

Netanyahu's recent announcement of settlement restraint, while a step beyond earlier positions, falls short of Israeli obligations under the Roadmap, Ban said.

The secretary-general added that he was also concerned about the recent evictions of Palestinians and house demolitions in Jerusalem, as well as the closure of Palestinian institutions in East Jerusalem, saying those actions "stoke tensions, cause suffering and further undermine trust."

Jerusalem is a final status issue to be negotiated by Israel and the Palestinians, Ban underlined, saying the city "should emerge as the capital of two States, with arrangements for the holy sites acceptable to all."

In addition, the UN chief emphasized the urgent need to end the crisis in the Gaza Strip, where an ongoing Israeli blockade has restricted Palestinians' access to vital humanitarian assistance.

Efforts must also be made to "address Israel's legitimate security concerns, including through mechanisms to prevent the smuggling of weapons into Gaza and an end to Palestinian rocket fire at Israeli civilians," he said.

Ban also called for credible domestic investigations to begin into allegations of violations of international humanitarian and human rights law by both sides during the fighting in Gaza and southern Israel at the start of this year.