European and Arab parliamentarians ended a two-day meeting Sunday by urging Israel to freeze all settlement activity in East Jerusalem and the West Bank, which they said is wrecking trust with the Palestinians and 'jeopardising' a two-state solution.

'The continuing expansion of settlements is destroying trust among partners, undermining the authority of the Palestinian negotiators and prejudging the outcome of the final negotiations,' said a communique adopted by the sixth plenary session of the Euro-Med Parliamentary Assembly (EMPA).

The meeting was attended by 280 lawmakers, 140 from each side of the Mediterranean.

'Israel should freeze all settlement activities,' the statement said. The Israeli team at the gathering, which was involved in wrangling with Arab delegations, publicly expressed reservations on the recommendations over settlement construction in East Jerusalem.

The gathering also urged Israel to undertake trust-building measures by lifting its siege of the Gaza Strip and finding a solution to the issue of 'Palestinian prisoners detained outside the

constraints of the Geneva Convention.'

The Assembly did not reach a consensus on a Tunisian proposal to transform the Facility for Euro-Mediterranean Investment and Partnership (FEMIP) into a Mediterranean branch of the European

Investment Bank (EIB).

The speaker of the Italian Chamber of Deputies, Gianfranco Fini, will hold EMPA's rotating presidency until March 2011, succeeding Abdul Hadi Majali, speaker of the outgoing Jordanian lower house of parliament, a statement said.