A 10-month freeze on settlement housing ends September 26, and Netanyahu is under pressure from hardline allies to resume construction.
Netanyahu has not said what he will do. He told his cabinet on Sunday that creative solutions are needed to make the talks succeed.
However, Abbas told PLO activists in Libya late Saturday that "if the freeze period is not extended by the end of the month, there will be no negotiations." Abbas said he made that clear to Netanyahu.
Netanyahu told his ministers on Sunday, "There is a feeling of maturity in the Arab world to reach peace." He added that while some important countries had yet to stand by the peace process, he was under the impression that they were ready to reach peace despite the attacks.
But speaking at a Likud ministers' meeting earlier, the prime minister stressed that problem of the settlement construction freeze in the direct negotiations with the Palestinians remained unchanged.
"There are many obstacles in the negotiations, and continuing the freeze is a big obstacle," Netanyahu said.
- Follow Ynetnews on Facebook