JERUSALEM (Reuters) - Benjamin Netanyahu's hawkish Likud party launched talks on Wednesday with right-wing parties on forming Israel's next government after he failed in initial efforts to enlist his main centrist rival in a broad coalition.

Netanyahu, who has said he wants to shift the focus of Palestinian statehood talks from territorial to economic issues, was chosen on Friday by President Shimon Peres to try to form a government and become prime minister for the second time.

Likud negotiators met officials of the ultranationalist Yisrael Beiteinu party of Avigdor Lieberman and other right-wing factions later near Tel Aviv on terms for political partnership in a governing coalition.

A spokeswoman for Lieberman said he would push to secure either the defense, finance or foreign affairs portfolio for himself. She said the party also wants the justice and internal security portfolios.

Yisrael Beiteinu, which came in third after the centrist Kadima party and the Likud in a February 10 election, opposes Israeli withdrawal from the occupied West Bank.

It advocates trading land in Israel where Arab citizens live for Jewish settlements in the West Bank in any peace deal with Palestinians and calls for all Israelis to take an oath of loyalty to the Jewish state.

A narrow right-wing government and a prominent role for Lieberman could put Netanyahu on a collision course with Washington, where the Obama administration has pledged swift pursuit of an Israeli-Palestinian peace deal.

Likud spokeswoman Dina Libster denied Israeli media reports that Netanyahu had ruled out appointing Lieberman as defense minister and would offer him either the finance or foreign affairs portfolios.

Ministerial appointments were not on the agenda today, Libster said.


Amid the Israeli coalition-building, Hillary Clinton will make her first visit to Israel and the West Bank as U.S. secretary of state next week, Israeli officials said.

President Barack Obama's Middle East envoy, George Mitchell, was due to precede her on Thursday.

Netanyahu has asked Kadima leader Tzipi Livni, Israel's foreign minister and its chief negotiator with Palestinians, to join him in a broad coalition government. She has so far refused but the two were expected to hold further talks on Friday.

Kadima wants guarantees from Netanyahu that his new government would engage in U.S.-backed talks with the Palestinians with the aim of achieving a Palestinian state, officials from Livni's party said.

Gideon Sa'ar, a lawmaker who heads Likud's negotiating team, declined to say whether it would accept Kadima's demand.

Under the mandate Netanyahu received from Peres on February 20, he has 42 days to form a government. Netanyahu served as prime minister from 1996 to 1999.

(Additional reporting by Allyn Fisher-Ilan, Editing by Diana Abdallah)