French minister bids to revive Middle East talks, Posted by Meosha Eaton

* French minister wants talks based on U.S. proposals

* Warns of tough days ahead if negotiations remain blocked

By Crispian Balmer

RAMALLAH, West Bank, June 2 (Reuters) - French Foreign Minister Alain Juppe made a last ditch effort on Thursday to revive peace negotiations between Israelis and Palestinians before a likely showdown at the United Nations in September.

U.S.-brokered talks collapsed last year in a dispute over Jewish settlement building, and the Palestinians say
that unless there is a breakthrough, they will seek U.N. recognition of statehood in September -- a step Israel strongly opposes.

"The status quo here in the Middle East between Israel and Palestinians is no longer tolerable," Juppe told reporters after meeting Palestinian Prime Minister Salam Fayyad in Ramallah.

"We are convinced that if nothing happens here between now and September the situation will be very difficult for everyone at the time of the United Nations General Assembly."

Juppe hopes talks can be resumed in Paris before the end of July, using a formula presented by U.S. President Barack Obama that would see talks focus on borders and security, using frontiers that existed before the 1967 war as a starting point.

The barbed issues of the status of Jerusalem and the right to return for Palestinian refugees to ancestral homes in modern-day Israel would be put off for a year, Juppe said.

Israeli Prime Minister Benjamin Netanyahu has already dismissed this proposal, saying the 1967 lines are indefensible.

Israeli officials also oppose the idea of splitting any future talks into two parts, arguing that their strongest negotiating hand is tied to land, meaning that all the key issues will have to be decided in a single moment.

"DIALOGUE POSSIBLE"

Juppe was due to meet Netanyahu later in the day and said that despite the Israeli leader's initial cool reaction to the Obama initiative, he thought there was room for manoeuvre.

"I think nonetheless there are reasons to believe that we can make progress and trigger a dialogue," Juppe said, adding that a decision on this would be needed in the coming days.

The French minister met Palestinian President Mahmoud Abbas in Rome on Wednesday, but declined to say whether Abbas had accepted the idea of talks without further conditions.

Abbas walked away from negotiations last year in protest at a renewal of Jewish settlement building in the occupied West Bank -- land the Palestinians want for their future state.

He had insisted the construction must stop for any talks to start, but appears to have modified his stance.

"The Israeli government's acceptance of the principle that President Obama laid out -- that the peace process must lead to two states on the 1967 borders -- (would represent) a door for the resumption of negotiations," Abbas told Reuters on Wednesday.

Given the impasse on talks, he has focused his attention on seeking a unilateral declaration of independence backed by the United Nations, which Israel fears would leave it isolated.

The United States has already said it opposes such a move -- a position which could kill off the initiative in the U.N. Security Council before it can reach the General Assembly.

France, which is also one of the five permanent members of the Security Council, has not yet decided whether to back the Palestinians, should peace talks not materialise, Juppe said. (Additional reporting by Ali Sawafta and Tom Perry; editing by Alastair Macdonald)