RAMALLAH, West Bank, Aug 4 (Reuters/Tom Perry) - Palestinian President Mahmoud Abbas is holding fast against U.S. pressure to begin direct peace talks with Israel before he is ready.

The next few weeks are likely to show whether he can stay his course.

He will have to decide whether to defy US President Barack Obama, who wants negotiations to begin by September, or the many Palestinians who are urging him to avoid direct talks with an Israeli government they believe is not ready for peace.

The odds would seem to favour a determined Obama getting his way sooner or later at the expense of Abbas's credibility, already damaged by political blunders that have played into the hands of his rivals in the Hamas group.

But bending to Washington's will would mean an embarrassing retreat from the demands he has set for direct talks. Even with a superpower knocking at his door, people familiar with Abbas's thinking say it is not a foregone conclusion he will give in.

Abbas wants Israeli Prime Minister Benjamin Netanyahu to make plain his intentions on key issues before Palestinian agreement to move from US-mediated proximity talks that began in May to face-to-face negotiations.

Aged 75, Abbas is keen to avoid blotting his record with yet another round of failed talks on creating a Palestinian state in the occupied West Bank and in the Gaza Strip, an enclave run by Hamas Islamists opposed to peace negotiations with Israel.

Influential Palestinians are urging him to say no unless his demands are first met, making it all the more difficult for Abbas to agree.

(The United States) should do something to break the impasse by giving him something to preserve his credibility, a Palestinian official said, speaking on condition of anonymity.

Abbas needs US guarantees. He has heard good intentions from America, but that is not going to lead anywhere.

OBSTACLE

Netanyahu is ready to talk now, putting Abbas, the weaker of the two, in the uncomfortable position of appearing an obstacle to U.S. diplomacy that has failed to make much headway over the past 18 months.

He has already turned down a US request which he says was made in July for an immediate start to direct talks. Publicly at least, there is no flagging of resolve that has surprised critics who never miss a chance to label him a sell-out.

The Palestine Liberation Organisation rallied to Abbas's side on Monday, warning that hastiness could expose US diplomacy to the risk of complete collapse.

The Palestinians are trying to keep the focus on the content rather than the form of the negotiations. Seventeen years since the start of the peace process, what is the point, they ask, of talking for the sake of it?

US assurances have so far fallen short of what Abbas is seeking.

He wants Netanyahu to give a sense of the shape and size of a future Palestinian state, accept the idea of a foreign party, NATO for example, guarding its borders and halt building settlement Jewish buildings on occupied land.

Abbas told Arab ministers last week that Obama had sent him three letters which the United States viewed as an adequate base for a move to direct talks. But he made clear the Palestinians were seeking more, the Palestinian news agency WAFA reported.

We must all continue to work with the American administration to achieve what we want with respect to the terms of reference and a halt to settlements before a start of direct talks and in order to guarantee their success, Abbas said.

Palestinians familiar with what has gone on during the three months of indirect negotiations mediated by US Senator George Mitchell are dejected.

They were heartened by Obama's unusually harsh criticism of Israeli settlement building in East Jerusalem this year, but have been disappointed by what they see as his failure to exercise strong pressure on Netanyahu.

Abbas now faces a choice between upsetting Obama or the many Palestinians, including members of his own Fatah party, who are putting pressure on him to stick to his demands.

There is wide opposition to a start to direct negotiations in the Fatah movement, in the PLO and among the public, said Palestinian political commentator Hani al-Masry.

If they mobilise, it will difficult for (Abbas) because such a decision will have no legitimacy.