[Update: 7:18 p.m.] Clinton said the United States' relationship with Israel is not at risk - "our relationship is durable, it's strong, it's rooted in common values."

"But we have to make clear to our Israeli friends and partners that the two-state solution - which we support, which the prime minister himself says he supports - requires confidence-building measures on both sides," Clinton told CNN's Jill Dougherty in an interview. "And the announcement of the settlements the very day that the vice president was there was insulting."

The construction, announced Tuesday, will be in the Ramat Shlomo neighborhood, located in disputed territory in East Jerusalem. The Israeli Interior Ministry denies the territory is in East Jerusalem.

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[Posted: 6:01 p.m.] Secretary of State Hillary Clinton told CNN Friday that Israel's announcement of new settlement construction in disputed territory in East Jerusalem was "insulting" to the United States.

The Israeli announcement came during Vice President Joe Biden's visit this week to Israel. It complicated U.S. efforts to set up so-called proximity talks between the Israelis and Palestinians, the latest attempt to nudge the two sides back toward talking directly.