WASHINGTON, June 3 (Reuters) - President Barack Obama said on Thursday the deadly Gaza flotilla incident was "tragic," but he expressed hope it could provide an opening to boost Middle East peace efforts.

Obama, in an interview with CNN's Larry King days after an Israeli raid on Gaza-bound aid ships, said Israel "has legitimate security concerns" about the Hamas-ruled Gaza Strip. Rockets are regularly fired from there into the Jewish state.

But he also said Israel's blockade of Gaza "is preventing people" from pursuing economic opportunities," according to an advance transcript of the interview to be broadcast on Thursday night.

"I think what's important right now is that we break out of the current impasse, use this tragedy as an opportunity," to advance the Israeli-Palestinian peace process, he said.

The Obama administration has taken a relatively cautious line while Israel faces international condemnation after its marines killed nine pro-Palestinian activists, including a 19-year-old American, aboard a ship carrying supplies to Gaza on Monday.

Obama reaffirmed U.S. support for an impartial investigation into the incident and said he expected Israel to agree to it "because they recognize that this can't be good for Israel's long-term security."

U.S. officials have said the incident underscores the need to make progress in indirect U.S.-brokered peace talks that began last month and have failed so far to make much headway. But analysts and many people in the region believe the incident is more likely to undermine fledgling peace moves.