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By Arshad Mohammed

JERUSALEM (Reuters) - Secretary of State John Kerry began a round of separate talks with Israeli and Palestinian officials on Thursday but acknowledged there was considerable skepticism that the two sides would resume peace negotiations.

Kerry has now visited Israel four times in his four months in office to try to restart peace talks.

The negotiations broke down in late 2010 in a dispute over Israeli building of Jewish settlements on occupied West Bank land that the Palestinians want for a state.

"I know this region well enough to know that there is skepticism, in some quarters there is cynicism and there are reasons for it. There have been bitter years of disappointment," Kerry said as he and Israeli Prime Minister Benjamin Netanyahu posed for pictures.

"It is our hope that by being methodical, careful, patient, but detailed and tenacious, that we can lay out a path ahead that can conceivably surprise people but certainly exhaust the possibilities of peace."

Kerry will meet Palestinian President Mahmoud Abbas later in the day.

Netanyahu said he wanted to restart talks with the Palestinians.

"It's something I hope the Palestinians want as well and we ought to be successful for a simple reason - when there's a will, we'll find a way," Netanyahu said.

Last week, Kerry telephoned Netanyahu to voice U.S. concern at Israel's plan to declare legal four unauthorized West Bank settler outposts.

Most of the world deems all Israeli settlements in the West Bank as illegal. Israel, which captured the land in the 1967 Middle East War, disputes this and distinguishes between about 120 government-authorized settlements and dozens of outposts built by settlers without official sanction.

The main issues that would have to be resolved in a peace agreement include the borders between Israel and a Palestinian state, the future of Jewish settlements, the fate of Palestinian refugees and the status of Jerusalem.

In his visits to the region, Kerry is also trying to put together an economic package for the Palestinians to go alongside the U.S. political initiative.

European diplomats, in meetings with Palestinian leaders, have been trying to steer them away from any notion the European Union might present a peace plan of its own. British Foreign Secretary of William Hague was also due to hold talks with Netanyahu and Abbas later in the day.

(Reporting By Arshad Mohammed and Crispian Balmer, Editing by Jeffrey Heller and Angus MacSwan)

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