Brazil's president has called for an immediate end to Israeli settlement construction on Palestinian territory, following a meeting with his visiting Palestinian counterpart.

Luiz Inacio Lula da Silva made the comment on Friday in the north eastern city of Salvador after talks with Mahmoud Abbas, who is in Brazil on his first stop of a tour through Latin America.

"The expansion of West Bank settlements must be frozen," Lula said.

"The borders of the future Palestinian state should be preserved, and freedom of movement needs to be guaranteed in the occupied territories."

Stalled peace efforts

Israel approved the construction of 900 housing units in occupied East Jerusalem earlier this week, calling it part of a "routine building programme".

The Palestinians say the settlement issue is central to efforts to restart stalled peace talks, and it has demanded that all construction is halted before they resume talks.

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"From the smallest country in the world to the world's largest country, among their priorities should be peace negotiations in the Middle East," he said.

Abbas said he appreciated Brazil's efforts to get involved in the process, but urged Lula to play a greater role in international peace efforts.

"With respect to you, President Lula, we would like you to have a role, and you're ready for it," Abbas said.

"We want you to play a role, which you have welcomed, and we welcome you playing a role like this, because we need you and your support and help."

Abbas is also scheduled to travel to Argentina and Chile during his tour of the region.