JERUSALEM: Israel is keen on Palestinian president Mahmud Abbas staying in office despite his announcement he will not seek re-election, officials said Friday as the Arab League urged him to reconsider.

The Israeli government has refrained from officially commenting on Abbas' announcement late on Thursday that he would not stand in the Palestinian general election he has called for January.

"This is an internal (Palestinian) affair," Deputy Foreign Minister Danny Ayalon told public radio. "We don't interfere in others' internal affairs.

"But it is evident that Israel and the United States are interested in a Palestinian leadership that is responsible and pragmatic," he said.

A senior Israeli official told AFP that hawkish Prime Minister Benjamin Netanyahu sees Abbas "as a partner for peace."

"We would like to start negotiations as soon as possible with the moderate Palestinian leadership," he said, requesting anonymity.

The popular Ynet news website quoted an official it did not identify as saying: "It's in Israel's interest to have Abbas stay in office."

"Netanyahu does not want Abu Mazen (Abbas) to leave," another told the Maariv newspaper. "He is careful not to embrace him too tightly, but clearly he is the candidate who is the lesser evil among the Palestinian leadership."

The left-leaning daily Haaretz said Israeli President Shimon Peres had telephoned Abbas a day before his announcement to try to talk him out of his decision.

"If you leave, the Palestinians would lose their chance for an independent state," Haaretz quoted Peres as saying. "The situation in the region would deteriorate. Stay, for the Palestinian people's sake."

Peres's spokeswoman declined to comment on the report.

In Cairo, Arab League chief Amr Mussa urged Abbas to reconsider his decision and assured the beleaguered leader of his support, Egyptian state news agency MENA reported.

Small demonstrations urging Abbas to change his mind were held in the occupied West Bank towns of Ramallah, Hebron and Jericho.

In the desert oasis town of Jericho, dozens of cars jammed the town centre after weekly Muslim prayers on Friday and honked their horns as passengers chanted for the president to stand in the next election.

Most of the Israeli press dismissed Abbas's announcement as a tactical manoeuvre meant to pressure the United States to maintain its pressure on Israel for a total freeze on settlement construction in the West Bank.

"The Abu Mazen Threat Show," said a headline in Maariv.

"This announcement is a tactical step, aimed first and foremost at the Americans," an Israeli official told the mass-selling Yediot Aharonot daily.

Abbas insisted late on Thursday that his announcement was "not a stunt" and Palestinian officials said the president's declaration was motivated by his disappointment with Washington on the settlements issue.

After months of pressuring Israel for a complete freeze, Washington backed off, with Secretary of State Hillary Clinton praising Israel's offer of limited restrictions on construction as "unprecedented."

Abbas did not connect his decision directly to the stalled peace process, but said he was "surprised" by Washington's apparent decision not to insist on a complete Israeli settlement freeze.

"We welcomed it, and were optimistic when President (Barack) Obama announced the need for a complete halt to settlements including natural growth," he said. "We were surprised by his (later) support for the Israeli position."