* Halfway to peace deadline, Kerry encounters difficulties
* Israel says security paramount, Palestinians see land-grab
By David Brunnstrom
RAMALLAH, West Bank, Dec 5 (Reuters) - The Palestinians rejected ideas raised by visiting U.S. Secretary of State John Kerry on Thursday for security arrangements under a possible future peace accord with Israel, a Palestinian official said.
There was no immediate response from the United States or Israel, which has long insisted on keeping swathes of its West Bank settlements, as well as a military presence on the territory's eastern boundary with Jordan, under any peace deal.
The official, who spoke on condition of anonymity and declined to elaborate on the proposals, said Kerry presented them to Palestinian President Mahmoud Abbas after discussing them separately with Israeli Prime Minister Benjamin Netanyahu.
"The Palestinian side rejected them because they would only lead to prolonging and maintaining the occupation," the official told Reuters, referring to Israel's hold on the West Bank, where, along with Gaza and East Jerusalem, Palestinians seek an independent state.
In remarks to reporters after his three-hour meeting with Abbas in the West Bank hub city of Ramallah, Kerry commended "his steadfast commitment to stay at the peace negotiations, despite the difficulties that he and the Palestinians have perceived in the process".
Kerry said they had discussed "at great length issues of security in the region, security for the state of Israel, security for a future Palestine".
"I think the interests are very similar, but there are questions of sovereignty, questions of respect and dignity which are obviously significant to the Palestinians, and for the Israelis very serious questions of security and also of longer-term issues of how we end this conflict once and for all," he added.
Abbas did not join Kerry at the Ramallah media appearance.
Disputes over proposed Israeli land handovers have bedevilled peace efforts for two decades, along with other issues like the status of Jerusalem and fate of Palestinian refugees. Kerry revived the talks in July and set a nine-month target for an accord, but both sides have signalled pessimism.
Palestinians worry that Israel's settlements - deemed illegal by most world powers - will not leave room for a viable state. Israelis question whether Abbas could commit the rival, armed Palestinian Hamas Islamists who govern Gaza to coexistence with the Jewish state.
Kerry, who met Netanyahu earlier on Thursday and returned to Jerusalem in the evening to confer again with the Israeli leader, said "some progress" had been made in the peace talks.
Acknowledging Israel's fear that ceding the West Bank could make it vulnerable to attack, Kerry said he offered Netanyahu "some thoughts about that particular security challenge".
Neither he nor Netanyahu gave further details, citing the need to keep the diplomacy discreet. Both described Israeli security as paramount, something Netanyahu said would require that his country "be able to defend itself by itself".
Israel quit Gaza unilaterally in 2005, after which Hamas came to power. The sides have repeatedly exchanged fire since.
Israeli media have reported that Kerry's proposals included security arrangements for the Jordan Valley, between the West Bank and Jordan. An Israeli official said that in recent weeks U.S. officials had visited Jordan Valley crossing points.
Kerry was due to depart on Friday after a helicopter tour of the West Bank and other areas with Israeli Defence Minister Moshe Yaalon. In Ramallah, Kerry said he may return to the region for more talks next week "depending on where we are".
"So the discussions will go on, the effort will continue, and our hopes with them for the possibilities of peace for the region," he said. (Writing by Dan Williams; Editing by Mark Heinrich)