WASHINGTON (AFP) - US Secretary of State Hillary Clinton expressed disappointment Wednesday that Israeli settlement building had deadlocked Middle East peace talks but refused to give up hope. We still believe a positive outcome is both possible and necessary, Clinton told a press conference in Washington that featured Palestinian prime minister Salam Fayyad in Ramallah via video-link. Clinton, who is to hold talks Thursday with Israeli Prime Minister Benjamin Netanyahu, and US President Barack Obama have both condemned Israel for its plans to build more than 1,300 new homes in annexed Arab east Jerusalem. Clinton on Wednesday also announced 150 million dollars in new assistance to the Palestinian Authority and called for other donor countries to step up aid. The new funding was described as budget support for the Palestinians and is separate from the 400 million dollars in aid that Obama pledged in June during a White House visit by Palestinian leader Mahmud Abbas.