* Hopes preliminary U.S. talks will conclude within weeks
* Urges both sides to meet road map obligations
* Conference could be option to launch process
WASHINGTON, June 16 (Sue Pleming, Reuters) - U.S. envoy George Mitchell said on Tuesday he hoped preliminary U.S. negotiations with all sides in the Israeli-Palestinian conflict would be complete within weeks and that full-blown talks could begin.
Mitchell, who just returned from his fourth trip to the region this year, gave no timetable for a resumption of peace talks and conceded the challenges ahead were huge and that the level of mistrust and hostility was high.
While not wanting to set a deadline for a process that had not even begun, Mitchell underlined what he said was a sense of urgency by Washington.
I would not have taken this position if I did not believe that there was a realistic chance of reaching those objectives, said Mitchell, President Barack Obama's Middle East envoy, who helped broker peace in Northern Ireland.
We hope to conclude the discussions in which we are now engaged very soon -- to me it's a matter of weeks, not months, he told reporters in his first Washington news conference since taking the envoy post in January.
Mitchell was in the Middle East last week meeting the Israelis and the Palestinians, who cut off peace negotiations after Israel's incursion into Gaza last December. He also visited Damascus for talks with Syria over the stalled peace process.
Israel's new envoy to Washington said on Tuesday that Prime Minister Benjamin Netanyahu was prepared to resume peace talks with the Palestinians that would cover core issues like borders and refugees.
But in an interview with Reuters, Ambassador Michael Oren cautioned that on the status of Jerusalem, also among the core issues in the peace process, Netanyahu had a firm position that the city must be the undivided capital of Israel.
Netanyahu made a major policy speech on Middle East peace last weekend in which he conditionally endorsed the goal of Palestinian statehood. He has been at odds with Obama over Washington's demand to halt Israeli settlement expansion in the occupied West Bank.
The Obama administration's immediate goal is to revive Israeli-Palestinian talks and get both sides to meet all their obligations under a 2003 peace road map that commits Israel to halting settlement expansion and the Palestinians to clamping down on militants.
We all share an obligation to help create the conditions for the prompt resumption and the early conclusion of negotiations, Mitchell said.
Israelis and Palestinians have a responsibility to meet their obligations under the road map, he added.
The Bush administration largely ignored Palestinian-Israeli peace efforts for its first term and then relaunched the peace process by holding a Middle East conference in Annapolis, Maryland in November 2007.
Asked whether the Obama administration planned an Annapolis-style conference to kick off a new round of talks, Mitchell did not rule it out, saying he wanted to build on the best of the past.
He said the personal involvement of both Obama and Secretary of State Hillary Clinton for an early resolution to the conflict had made a dramatic difference in changing attitudes in the region.
Moreover, he said there was a greater interest in tackling the thorny conflict because of threats posed by Iran, which the West suspects of building a nuclear weapon and Tehran says is for peaceful purposes.
The threat from Iran creates a circumstance unique in the region's history in establishing the possibility of a common interest between nations who for so long have been in an adversarial position, said Mitchell. (Editing by Peter Cooney)