The expiry on Sunday of the Israeli construction restrictions has threatened to scuttle Mideast peace negotiations, just weeks after they were launched in early September with great fanfare at the White House.

Palestinians regard settlement building as a major obstacle to peacemaking and have threatened to walk out of negotiations if the building restarts after the moratorium officially expired at midnight Sunday.

Last week, the "Quartet" of Mideast peacemakers urged Israel to extend the moratorium.

A statement released by Ban's spokesman Martin Nesirky said the secretary-general was "disappointed that no such decision has been taken and (is) concerned at provocative actions taking place on the ground." Ban reiterated that "settlement activity is illegal under international law," and urged the Jewish state to fulfill its obligation to freeze further construction.

The Obama administration, which dispatched special Middle East peace envoy George Mitchell to the region in an urgent bid to salvage the stalled negotiations, used language similar to Ban's. "We are disappointed but we remain focused on our long-term objective and will be talking to the parties about the implications of the Israeli decision," State Department spokesman P.J. Crowley said.

Other ministers attending the session expressed frustration.

AP