The Palestinians' "all or nothing" strategy of insisting on a total freeze on West Bank settlement construction risks paralyzing Middle East peace talks in their infancy, officials close to the heart of negotiations warned Tuesday.

As Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas arrived in Egypt for a second round of negotiations, senior officials inside Netanyahu's office said they expected the Palestinians to avoid extreme responses that could derail the U.S.-sponsored peace process.

"This attitude of all or nothing has over the past year led to a stagnation, with the result that in nine months of construction freeze, there were no negotiations," one high-ranking official told Haaretz.

Under international pressure, Israel in late 2009 declared a 10-month freeze on settlement building in the West Bank, excluding East Jerusalem. But that is due to expire in late September, less than a month after talks kicked off in Washington, and the Palestinians have repeatedly vowed to walk out if building resumes.

"Choosing to continue with settlements in any form means destroying the negotiations," chief Palestinian negotiator Saeb Erekat said on Tuesday.

As well as the row over settlements, early talks have been marred by disputes over format and as she accompanies the leaders to the Red Sea resort of Sharm el-Sheikh, U.S. Secretary of State Hillary Clinton's main aim will be to save negotiations from an early death.

"For me, this is a simple choice: no negotiations, no security, no state," Clinton said en route to the talks.

Leaks

On Sunday, Netanyahu hinted he would be willing to impose a partial freeze over the coming 12 months of scheduled talks, but this has so far not been accepted by the Palestinians.

"The aim of this trip and the meeting with Abu Mazen [Abbas] is to find a way to continue the talks, not to blow them out of the water," the Israeli official said. "If we can't reach agreement on a small issue like the settlements, what are our chances of striking a deal over borders and refugees?"

Ahead of the Sharm summit, officials close to Netanyahu said the prime minister had been angered by a series of public statements by Abbas' confidantes revealing details of the first round of talks in the U.S.

Netanyahu sees the apparent leaks as a breach of an understandings with the Palestinians secured in Washington under Clinton's auspices, aides said. The sides had agreed to keep the content of closed-door talks secret, to shield both leaders from anger at home over potential concessions.

"Negotiations have to be conducted discretely," a Netanyahu aide said.