Britain says EU not looking at Israel sanctions

Britain's Foreign Secretary William Hague arrives in Downing Street in London December 3, 2012.

LONDON (Reuters) - British Foreign Secretary William Hague said on Tuesday that European sanctions against Israel in response to its latest plans to build settlements on disputed land were not an option.

However, he told parliament that he was in talks with other European foreign ministers about formulating "incentives and disincentives" to support U.S. efforts to bring Israel and the Palestinians back to the negotiating table.

Israeli Prime Minister Benjamin Netanyahu decided to expand settlement building after the United Nations' de facto recognition of Palestinian statehood last week, and has brushed off international criticism of the move.

The land Israel plans to build on is seen as essential for a contiguous Palestinian state as envisaged by the internationally backed two-state solution to the Israel-Palestinian conflict.

"I don't think there is enthusiasm around the European Union ... about economic sanctions in Europe on Israel. I don't believe there would be anywhere near a consensus nor is that our approach. We continue to try to bring both sides back to negotiations," Hague said.

"Nevertheless, if there is no reversal of the decision that has been announced, we will want to consider what further steps European countries should take," he said.

France on Monday also dismissed the prospect of European sanctions on Israel.

Settlement building on land Israel captured in a 1967 war is considered illegal by most world powers and have routinely drawn condemnation from them.

(Reporting by Mohammed Abbas; editing by Stephen Addison)