(Adds State Department comment, details, paragraphs 3, 8, 17)

By Arshad Mohammed

LONDON, Oct 18 (Reuters) - U.S. Secretary of State Condoleezza Rice said on Thursday she was encouraged by her talks in Israel and the Palestinian territories this week and a U.S. official said she planned to return in about two weeks.

White House National Security Adviser Stephen Hadley plans to visit the region next week to prepare for a U.S.-hosted peace conference later this year, said the U.S. official who spoke on condition that he was not identified.

Rice's next visit, expected as part of a trip that will also take her to Turkey for an Iraq neighbors conference, would be her eighth to the region this year the Bush administration seeks to revive peace negotiations between the two sides.

Wrapping up four days of talks with Israeli, Palestinian and other Arab leaders, Rice was upbeat about her visit and played down public sniping between the two parties.

Israeli and Palestinian negotiating teams have been formed to draft a joint document to be presented at the U.S.-hosted meeting expected to take place in Annapolis, Maryland, in November or December.

"The teams are serious, the people are serious, the issues are serious and so I am not surprised that there are some tensions," Rice told reporters as she flew to London where she later met Jordan's King Abdullah.

"I am not surprised that there are some ups and downs. That's the character of this kind of endeavour but I was encouraged by what I heard."

The State Department said Rice and King Abdullah had "a good exchange" on the work needed before the meeting and said Jordan was "encouraged" by Rice's latest talks in the region.

The United States hopes formal peace talks can begin after the conference, the most dramatic effort by the United States to advance Israeli-Palestinian peace since the collapse of the Camp David talks collapsed in 2000.

Palestinian negotiator Saeb Erekat said a deal had to be reached before the U.S. presidential race heats up next summer. "The timeline is during President Bush's tenure, so we have to conclude before the Americans get very busy with their election campaigns. We have to do it before August," he told Reuters.

FAR APART

The two sides still appear to be far apart on the joint document they hope to present at the meeting.

The Palestinians have called for it to address in some detail the core issues that divide them including borders, Jerusalem and the fate of millions of Palestinian refugees, and they would like a timetable for the peace negotiations.

Israeli Prime Minister Ehud Olmert has urged a broad-brush approach and Foreign Minister Tzipi Livni has said creating too high expectations could lead to violence, as was the case in late 2000 when the Camp David peace talks collapsed.

On Wednesday, Palestinian President Mahmoud Abbas said he would not attend the Annapolis meeting at any cost and one of his top aides accused the Israeli team of not being serious enough about the talks.

Livni, the head of the Israeli delegation, told reporters on Wednesday she would not engage in such a "blame game."

Still, Rice said she found it heartening both sides were talking about trying to negotiate an end to their conflict , something that she said "seemed a very distant proposition some time ago."

After having a private dinner with former British foreign minister Jack Straw, who is now Britain's justice minister, and with former British ambassadeor to the United States Sir David Manning, Rice returns to Washington on Friday.

AlertNet news is provided by