UPDATE 1-Bush tries to convince Arab sceptics on peace push

(Updates with Bush advance speech excerpts)

By Matt Spetalnick and Tabassum Zakaria

SHARM EL-SHEIKH, Egypt, May 18 (Reuters) - U.S. President George W. Bush sought to reassure sceptical Arabs on Sunday he is committed to securing a deal on Palestinian statehood before he leaves office, despite his outspoken support for Israel.

Wrapping up his Middle East tour in the Egyptian resort of Sharm el-Sheikh, Bush was looking to ease Palestinian dismay over his visit to Israel, where he lavished the Jewish state with praise, hailing it as a "homeland for the chosen people."

Bush planned to use a speech to Arab leaders at an economic forum in Sharm el-Sheikh on Sunday to insist that he "firmly believes" a Middle East peace deal can be reached this year -- a deadline widely viewed as unrealistic.

"We must stand with the Palestinian people, who have suffered for decades and earned the right to a homeland of their own," Bush will say, according to an advance text of his speech.

Adjusting his approach from the one taken during his visit to Israel last week to celebrate its 60th anniversary, Bush will challenge the Palestinians to "fight terror" and call on Israel to make "tough sacrifices for peace and ease restrictions on Palestinians."

Bush was alluding to the hardship that Palestinians face from Israeli roadblocks and barriers in the occupied West Bank, measures they call collective punishment but which Israel says are to defend it against militant attacks.

Bush's more sympathetic language on the Palestinians' plight appeared aimed at countering Arab doubts, reinforced by his Israel visit, about his ability to act as an even-handed peace broker.