FACTBOX: Factors to watch from Israel, Palestinians

(Reuters) - U.S. President Barack Obama brought Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas together on Tuesday, urging them to restart formal peace talks soon.

Here is the state of play on key issues affecting Israel and the Palestinians and the factors to watch in coming weeks:

Next week, Obama's Middle East envoy, George Mitchell, who has been trying to seal a deal with Israel on a construction freeze in Jewish settlements in the occupied West Bank, will continue talks with Israeli and Palestinian officials.

U.S. Secretary of State Hillary Clinton will report back to Obama by mid-October on progress toward resuming peace negotiations suspended since December.

Mitchell signaled after Tuesday's Obama-Netanyahu-Abbas summit in New York that a total cessation of building in settlements was not essential for the resumption of peace talks leading to the creation of a Palestinian state.

But watch for another obstacle even if a compromise is reached on the settlement construction issue. Abbas made clear after the meeting that Israel must honor agreements on borders and Jerusalem that he said its previous government made in talks in 2008.

Officials and diplomats have said that Netanyahu's centrist predecessor, Ehud Olmert, last year discussed land swaps that would have given Palestinians close to the full amount of territory Israel captured in 1967 and also spoke about dividing control of the city of Jerusalem with the Palestinians.

However, no clear agreements were ever published. At a briefing with reporters who traveled with him to New York, Netanyahu said, "We are certainly not obligated to the positions of the previous government."

Netanyahu, who highlights the fact that Abbas' authority is limited since Islamist Hamas seized Gaza in 2007, has suggested any relaunched peace talks focus on interim improvements in security and prosperity.

Looking ahead to a final peace accord, Netanyahu wants Palestinians to accept Israel as a Jewish state. Abbas rejects that. Obama is unlikely to let a dispute over that issue prevent at least a start to negotiations.

Obama is also pressing Arab states for goodwill gestures to Israel to aid the process. Little sign of those yet.

If talks resume, the outlines of a possible accord remain those of a decade ago, as do the elements of discord. The rift between Fatah and Gaza's Hamas Islamists, shunned by Israel and the West, is an additional obstacle.

Hamas has made clear it would not recognize any compromise Abbas made with Israel.

(Writing by Jeffrey Heller, Editing by Doina Chiacu)