JERUSALEM, July 8 (Reuters) - U.S. President Barack Obama said in a rare interview with an Israeli television station he thought it may be possible to achieve a Middle East peace deal in the next few years and urged Israel to seize the chance.

"We probably won't have a better opportunity than we have right now. And that has to be seized," Obama told Channel 2 television in remarks broadcast on Thursday, two days after his talks at the White House with Prime Minister Benjamin Netanyahu.

But Netanyahu, speaking in New York, signalled Israel was not prepared to extend a partial freeze on Jewish settlement building in occupied land that could help coax Palestinians to launch the talks Obama wants to convene by September.

"I think we've done enough. Let's get on with the talks," Netanyahu told the Council on Foreign Relations, a think tank, when asked about the limited Israeli building hiatus due to expire in two months time.

Obama characterised Tuesday's 80-minute meeting with the Israeli leader at which he called on both Israel and the Palestinians to resume direct negotiations, rather than the current indirect track mediated by Washington, as "excellent".

Asked if he thought an Israeli-Palestinian peace deal could be reached during his term in office, which would expire in 2013, Obama replied: "I think so."

He thought the process would be "wrenching. It's going to be difficult." But he said: "The fact that he (Netanyahu) is not perceived as a dove, in some ways can be helpful," in bringing together right- and left-wing Israelis behind a deal.

Obama said of Netanyahu: "I think he is somebody who understands that we've got a fairly narrow window of opportunity," while moderate Palestinians, President Mahmoud Abbas and Prime Minister Salam Fayyad were in power.

"I had the impression that Prime Minister Netanyahu isn't interested in just occupying a space, a position, but he's interested in being a statesman and putting his country on a more serious track," Obama said.

LIMITED PROGRESS

Israelis and Palestinians have held indirect contacts since May, mediated by Obama's Middle East envoy Senator George Mitchell, that have made only limited progress toward reaching Washington's goal of a two-state solution of the conflict.

In his remarks in New York at the end of a three-day visit, Netanyahu also said Israel and the Palestinians "should seize the moment" and launch direct negotiations.

But the Israeli leader gave no indication he would meet Palestinian demands to renew the talks that ran aground in late 2008. Palestinians want a complete halt to Jewish settlement building in occupied land and East Jerusalem.

Asked whether he would press Netanyahu to renew at least a partial settlement building freeze, a demand that could pose a political risk to Netanyahu's coalition of pro-settler parties, Obama replied:

"What I want is for us to get into direct talks," adding that such a channel "builds trust. And trust allows for both sides to not be so jumpy or paranoid about every single move that's being made."

Seizing the chance to help repair his own image in Israel where he is widely viewed with suspicion, Obama dismissed as "greatly overstated" reports that his previous talks with Netanyahu had been chilly or marred by differences over settlements.

Asked why he thought some Israelis were "anxious" and sceptical of his commitment to their future, Obama said "it may just be the fact that my middle name is Hussein, and that creates suspicion," along with his reach-out to the Muslim world.

He repeated America's long-standing commitment to Israel, and said his administration "has provided more security assistance to Israel than any administration in history."

Obama also said Washington has "not taken options off the table" to prevent Iran from developing an atomic weapon, which Israel sees as a great threat, though he also reiterated he was still committed to pursuing diplomatic steps.