JERUSALEM -- Israeli Prime Minister Benjamin Netanyahu declared Sunday that Israel would not restrict construction in east Jerusalem, a step the U.S. has requested - sticking to a tough position hours before he sets off on his first trip to Washington since a diplomatic row erupted between the two allies.

Netanyahu also said he was willing to broaden indirect talks with the Palestinians to include the main issues dividing them. The prime minister originally had wanted to put off a discussion of issues like the status of contested east Jerusalem, final borders and the fate of Palestinian refugees until direct talks are launched.

Netanyahu's refusal to budge on east Jerusalem - whose fate lies at the crux of the Israeli-Palestinian conflict - defies a U.S. demand to cancel a major new housing project at the heart of the feud. But in confidential talks, he apparently offered enough steps to prompt U.S. Secretary of State Hillary Rodham Clinton to call them "useful and productive" and dispatch an envoy back to the region this week.