TEL AVIV (AFP) - US Secretary of State Condoleezza Rice met Israeli leaders on Sunday at the start of her latest Middle East tour, warning that she did not expect a major peace breakthrough ahead of a US-sponsored meeting next month.

And she said she will tell Israel that its expropriation of Arab land near Jerusalem erodes confidence ahead of the conference, which is aimed at ending almost seven years of deadlock in Middle East peacemaking.

"The point that I will be making is that we have to be very careful as we are trying to move toward the establishment of a Palestinian state about actions and statements that erode confidence in the parties' commitment to a two-state solution," Rice told reporters travelling with her.

She was responding to a question about Israel's confiscation of land between occupied east Jerusalem and the key West Bank settlement of Maale Adumim last week, reviving fears that the territory could be split in two.

Although Israel informed her that the seized land was earmarked for a road "to improve Palestinian mobility" and was "not imminent," Rice said the timing of such projects was too sensitive in the run-up to the US-sponsored peace conference.

"Even if the intentions are good, even if the actual events on the ground are intended to produce a certain kind of outcome, you know that this is a very delicate time," she said.

"In a period of time in which we are trying to build confidence of the parties in each other, when we are trying to build confidence that the two state solution can work, when we are trying to build confidence that there are not going to be actions on the ground that prejudge the outcome, now it is time to be extremely careful," she said.

Prime Minister Ehud Olmert's office declined reaction to Rice's comments.

Rice, on her seventh trip to the region this year, met Defence Minister Ehud Barak to discuss Israel's controversial land expropriation as well as ways to ease restriction on Palestinians travelling across the occupied West Bank, an Israeli official said.

She is also due to visit the Palestinian territories and Egypt in the course of four days.

Rice warned that her visit was not aimed at producing a breakthrough ahead of the US-called peace meeting, expected in Annapolis, Maryland in November although the date, venue and participants have not yet been announced.

"I don't expect out of these meetings that there will be any particular outcome in the sense of breakthroughs on the (joint) document" currently being worked on by Israeli and Palestinian negotiating teams.

"So I would just warn in advance not to expect that because it is really a work in progress.

"So we are just going to try to keep moving the process forward and I expect I will be out here again in the next couple of weeks as we try to move toward an international meeting sometime in the fall."

Olmert and Palestinian president Mahmud Abbas have met four times in the span of two months to prepare for the meeting and newly created negotiating teams are trying to hammer out a joint document ahead of the conference.

But although both sides say they will start final status negotiations after the November conference, there are widespread disagreements over what the joint document, which will serve as a basis for those talks, will say.

"Talks between us and the Palestinians should be balanced and cautious with the intention of reaching a joint statement during the international meeting, although such a statement was never a condition for holding the summit," Olmert told a cabinet meeting.

He rebuffed Palestinian calls for a clear timeframe for implementing solutions to the thorniest problems of the decades-long conflict -- borders, refugees and the status of Jerusalem.

"I believe that setting a timetable for such a process would create problems rather than solve problems," he said.

In a sign that Israel could be hardening its position ahead of the meeting, Olmert announced the appointment of Foreign Minister Tzipi Livni to head the negotiating team.

Livni has generally held a more hardline view over the peace talks than the man who had been expected to head the team -- Deputy Prime Minister Haim Ramon, a close Olmert ally who last week drew heavy fire after saying that sovereignty over Jerusalem should be shared with the Palestinians.