AFP - Israeli settlement expansion on Palestinian territory must stop immediately, Brazilian President Luiz Inacio Lula da Silva said Friday after meeting Palestinian leader Mahmud Abbas.

"The expansion of West Bank settlements must be frozen. The borders of the future Palestinian state should be preserved, and freedom of movement needs to be guaranteed in the occupied territories," said Lula.

Abbas called on Lula, who met last week with Israeli President Shimon Peres and discussed the same topic with him, to play a greater role in international efforts to reach an agreement on Middle East peace.

"We appreciate the efforts of Brazil," Abbas told reporters.

"With respect to you, President Lula, we would like you to have a role, and you're ready for it," he said, adding that "the world can benefit from" Brazil's influence in the region.

Lula met with Abbas in the northeastern city of Salvador for two hours, and the pair discussed Middle East divisions and a way forward for the Palestinian territories.

"The peace process will benefit from the contribution of other countries other than those traditionally involved" in negotiation efforts, Lula said.

In recent weeks Brazil has appeared to show greater willingness to assume a role in Middle East affairs.

After Peres and Abbas, Lula is expected to meet Monday with Iranian President Mahmoud Ahmadinejad.

On Thursday, Brazil's foreign ministry expressed "deep concern" over the Israeli announcement on the construction of hundreds of new houses in an east Jerusalem settlement.

Israel said earlier it would build 900 new homes at the Gilo settlement in east Jerusalem, which Israel invaded and occupied in 1967 and subsequently annexed, a move not recognized by the international community.

Palestinians want east Jerusalem to be the capital of their future state.