Updated

The U.S. Embassy in Tel Aviv said Monday it was "deeply concerned" by Israel's plans to build hundreds of new homes in the West Bank following a deadly attack on a settler family, calling Israeli settlements "illegitimate" and an obstacle to peacemaking.

While agreeing with the U.S. criticism, Palestinian President Mahmoud Abbas reached out to the Israeli public, granting a rare interview to state-run Israel Radio and denouncing the weekend attack in the settlement of Itamar as "despicable, immoral and inhuman." Abbas rejected the Israeli charge that his government was indirectly to blame, and Israel's prime minister said his denunciation was not enough.

While the country was still reeling from the gruesome attack, in which two parents and three young children were fatally stabbed as they slept, the Israeli government announced Sunday that it had approved the construction of between 400 and 500 new homes in major West Bank settlement blocs.

"They murder, we build," Israeli Prime Minister Benjamin Netanyahu said Sunday during a condolence call to the grieving family. Palestinian militants are presumed to have carried out the assault.

The plans for new construction infuriated Palestinians, and together with the attack, drove prospects for renewed peacemaking even further out of reach. A Netanyahu aide said the Israeli government informed the U.S. — which has been toiling with little success to break the negotiations deadlock — of the decision.

"We're deeply concerned by continuing Israeli actions on settlements in the West Bank," the statement from the U.S. Embassy said. "As we said before, we view these settlements as illegitimate and as running counter to efforts to resume direct negotiations."

Just last month, the United States vetoed a U.N. Security Council resolution condemning Israeli settlement construction. The U.S. said it agreed with the wider world about the illegitimacy of continued Israeli settlement activity but thought Israelis and Palestinians should resolve key conflicts between them, and the council wasn't the proper venue for the dispute. The council's 14 other members voted in favor of the resolution.

A senior Israeli official responded to the U.S. criticism by reasserting Israel's expectation that the major settlement blocs, where most of the 300,000 West Bank settlers live, will remain in Israeli hands under any final peace accord.

An additional 200,000 Israelis live in east Jerusalem, captured along with the West Bank from Jordan in the 1967 Mideast war. The Palestinians want both territories, along with the Hamas-ruled Gaza Strip, for their future state. They say all settlements are illegal.

On Monday, the Israeli army pressed forward with its search for the attacker in Awarta, a Palestinian village next to Itamar. Residents said soldiers using loudspeakers ordered men between the ages of 18 and 40 to report to a village school for questioning. The military confirmed the operation was under way.

Israeli officials say the army has arrested about 20 suspects but has not identified the assailant.

Jewish settlers bent on retaliation threw rocks at cars driving on a main road linking the Palestinian cities of Nablus and Ramallah and set several cars on fire outside of Ramallah and in the town of Qalqiliya, Palestinian officials said.

Israeli officials had accused Abbas of only tepidly condemning the carnage in the settlement of Itamar. They suggested his government was indirectly to blame, calling it the product of incitement against Israel.

Abbas spoke to Israel Radio on Monday, harshly condemning the violence and saying his government would have prevented the attack if it had advance knowledge. He said he would not allow violence to expand.

Abbas disputed Israel's allegations that Palestinian clerics preach incitement, saying his government hands out a uniform sermon to be delivered by all. He called for a joint Israeli-Palestinian-U.S. team to examine claims of incitement in Palestinian textbooks.

Israel has long contended that Palestinian textbooks and official media preach hatred toward Israel and that the killers of Israelis are often glorified.

Later Monday, Israeli Prime Minister Benjamin Netanyahu welcomed the gesture, but said Abbas had to go further.

"There is importance to the things he said, but in my view what is more important ... is that he says the things on Palestinian radio," Netanyahu told lawmakers in his Likud Party.

Soon after the Friday attack, Abbas condemned it in a statement published and broadcast in Palestinian media.

"On the backdrop of what has happened in Itamar, President Mahmoud Abbas emphasized his rejection and condemnation to all acts of violence against civilians whatever the reasons and whoever the perpetrators," the statement said.

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Mohammed Daraghmeh contributed to this report from Ramallah