The European Union has announced a new funding package of 42.5 million euros (nearly $53m) to help the Palestinians build their new state.

The announcement came as Brussels urged the US to not go it alone in any effort to make peace between Israel and the Palestinians.

The EU warned that doing so would end in failure.

"Any framework for negotiations must be multilateral and must involve all players - all partners - that are essential to this process. A process without one or the other would simply not work, would simply not be realistic," EU foreign policy chief Federica Mogherini said.

"Nothing without the United States, nothing with the United States alone," Mogherini told reporters in Brussels.

The meeting was the first of its kind since US President Donald Trump recognised Jerusalem as Israel's capital, breaking with an international consensus that the holy city's status should be resolved in negotiations between Israel and the Palestinians.

Mogherini said "this is a difficult moment" for the region. She said that Wednesday's meeting would focus on ways to promote a two-state solution to the conflict and expressed hope that it "could be an element of facilitation for restoring some trust and a level of confidence".

Meanwhile, the United States on Wednesday put the head of Palestinian Islamist movement Hamas, Ismail Haniya, on its terror

blacklist and slapped sanctions on him - a move sure to raise tensions.

The 55-year-old Haniya, who was named head of Hamas in May 2017, represents the more pragmatic wing of the movement, which said the US move would not deter the group's “resistance."