* U.S.-Egyptian ties soured under Bush administration
* Obama to again press Arab states to take certain steps
* Mubarak: Negotiations should focus on overall peace deal
WASHINGTON, Aug 18 (Reuters) - U.S. President Barack Obama, looking to kickstart the stalled Middle East peace process, will hold talks on Tuesday with Egyptian leader Hosni Mubarak, who Washington hopes can help to get things moving.
The two presidents will meet during Mubarak's first visit to Washington since 2003. Relations between Washington and Cairo deteriorated under the former Bush administration, whose focus on human rights and democracy promotion angered Egypt.
Obama, who has been less vocal about these issues in Egypt and elsewhere in the Middle East, has made finding a solution to the Israeli-Palestinian conflict a top priority.
"The trip is symbolic of the rewarming of a relationship that underwent a lot of tension during President Bush's time in office," said Tamara Cofman Wittes, a Middle East expert at the Brookings Institution think-tank in Washington.
Mubarak's visit comes as the Obama administration has been pushing moderate Arab states to take steps that could encourage Israel to freeze settlement building on Palestinian territory.
Arab states have so far been cool to the idea of steps such as giving overflight rights to Israeli civilian aircraft, lifting bans on visitors with Israeli stamps in their passports and allowing Israel to open interest sections in foreign embassies in Arab capitals.
They have put the onus on Israel to revive the peace process, while Israel has said the Palestinians and Arab states must first do more to advance the peace process.
A senior U.S. administration official said Obama and Mubarak would have a "robust discussion on the state of play in the Middle East."
"In particular, the president will want to discuss how Arab states can help create a context to launch negotiations between Israel and the Palestinians, by agreeing to gestures toward Israel in the context of the Arab Peace Initiative," he said.
Arab leaders say they remain committed to the initiative, which offers Israel recognition in return for withdrawal from Arab land occupied in 1967, creation of a Palestinian state and a "just" solution for Palestinian refugees.
Mubarak, in an interview with "The Charlie Rose Show" on the PBS network before his visit, said Israeli-Palestinian negotiations should concentrate on an overall peace deal, rather than getting hung up on the settlement issue.
"If Israel solves the problem between them and the Palestinians, and two states are established, Israel with Palestine, two states, I think Arabs, we can have normal relations with Israel," Mubarak said.
"Instead of saying stopping more settlements, and we heard this many times, now for over 10 years, and (they) never come to a stop, what I can say is that we have to consider the whole issue holistically, to negotiate on the final resolution."
It will be the third time Obama, 48, and Mubarak, 81, have met in the last three months. They had private talks when Obama was in Cairo in June to deliver his major speech to the Muslim world and on the sidelines of the Group of Eight gathering in Italy in July.
Analysts and diplomats say Obama -- who was still a college student when Mubarak was first sworn in as president after the assassination of Anwar Sadat in 1981 -- needs the Egyptian leader's help to bring the various sides together.
"There is a point to be made that the personal chemistry between President George W. Bush and President Mubarak was very bad. So I think there is an effort to put that well in the past," said Steven Cook, a Middle East expert writing a book on U.S.-Egyptian relations.
"You have this much younger man who is the leader of the world and the elder statesman who has been in power for 28 years in the largest, arguably most influential Arab state. There is this effort to build a personal chemistry."
Egypt, which in 1979 became the first Arab state to sign a peace treaty with Israel, has been trying to persuade the Islamist Hamas movement to join its rival Fatah in a Palestinian unity government as a precursor to peace talks.
"Egypt plays a role in terms of its relationship with the Israeli government, with the Palestinian Authority and its effort to reconcile the Palestinian factions," Egypt's ambassador to Washington, Sameh Shoukry, told Reuters.
Many human rights groups hope Obama will quietly press for democratic reforms. Human Rights Watch has called Mubarak an authoritarian ruler "presiding over a system in which opponents are muzzled and imprisoned, and where torture is widespread."
While the U.S. official said Obama would likely raise the issue in his talks with Mubarak, the Egyptian leader made clear in his PBS interview that he would not tolerate any outside interference in his country's internal affairs. (Editing by John O'Callaghan)
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