Israel expressed disappointment Tuesday with Argentina's recognition of a Palestinian state in territories Israel occupied in 1967, saying they undercut American-led efforts to create such a state through negotiations with Israel.

Argentina said its move, announced Monday just days after Brazil took a similar step, reflected the country's deep frustration with gridlocked peace efforts.

But Israeli Foreign Ministry spokesman Yigal Palmor said unilateral recognition was "counterproductive" to peacemaking.

"This disappointing and damaging decision is contrary to the existing Israeli-Palestinian agreements," which call for the establishment of a Palestinian state as part of a peace treaty, Palmor said.

Peacemaking efforts ground to a halt in late September, just three weeks after they began, when Israel resisted U.S. and Palestinian efforts to extend a moratorium on housing starts in West Bank settlements.

Palestinians say they won't return to the negotiating table unless Israel halts all settlement construction in the West Bank and east Jerusalem, captured by Israel in the 1967 Mideast war.

The Palestinians want both territories, along with the Hamas-ruled Gaza Strip, for a future state.

The Palestinians say more than 100 countries have recognized a Palestinian state over the past two decades, most of them Muslim and former Soviet bloc countries. The United States and European Union — the major foreign powers involved in peacemaking — have not.

Argentina's foreign minister, Hector Timerman, said Monday that in view of stalemated peace efforts, "the time has come to recognize Palestine as a free and independent state."

Israel's deputy foreign minister, Danny Ayalon, played down the significance of the actions by Brazil and Argentina, telling Army Radio that the two nations are "distant" countries that "don't realize the diplomatic mistake they made." He said the declarations have no practical meaning.

Palestinian officials were buoyed by Argentina's recognition.

Palestinian peace negotiator Nabil Shaath said Argentina's recognition was significant because it is one of Latin America's most developed countries and because it has a vibrant Jewish presence: Argentina has Latin America's largest Jewish population and is the headquarters of the umbrella group for Latin America's Jewish communities.

"We don't say that such recognitions immediately end Israeli occupation, but it gives us a push forward and helps getting more recognition," Shaath said, adding that in the future the Palestinians would focus their efforts on European countries.

Palestinian President Mahmoud Abbas has said he would give negotiations a chance first. But Palestinian leaders have said they would push for unilateral recognition of a state in the 1967 borders if negotiations with Israel fail. And they have been lobbying for international support for their fallback option.