(Adds reaction by Israel’s ambassador in new 5th para; new 7-8th)

GENEVA, Feb 13 (Reuters) - A U.N. report on establishing a database of companies with business ties to Israeli settlements in the occupied West Bank has been delayed, the U.N. Human Rights Council said on Monday.

Reuters reported on Friday that the politically sensitive report, due this month from the office of U.N. High Commissioner for Human Rights Zeid Ra’ad al-Hussein, was not ready.

The council’s president, El Salvadorean ambassador Joaquin Alexander Maza Martelli, said on Monday that Zeid had written to him recommending the report be deferred and saying it should now be submitted “as soon as possible, but no later than the end of December 2017”.

The issue is sensitive because companies appearing in such a database could be targeted for boycotts or divestment aimed at stepping up pressure on Israel over its West Bank settlements, which most countries and the United Nations view as illegal. Goods produced there include fruit, vegetables and wine.

“This resolution about the creation of a database should not have been accepted in the first place. It reflects and perpetuates the discrimination towards Israel at the U.N. in general, and at the Human Rights Council in particular,” Israel’s ambassador to the United Nations in Geneva, Aviva Raz Shechter, said in a statement.

Israel assailed the council last March for launching the initiative at the request of countries led by Pakistan, calling the database a “blacklist” and accusing the 47-member state forum of behaving “obsessively” against Israel.

Israel was backed by its main ally, the United States.

The criteria for establishing a database are complex, including whether companies could appeal any listing, diplomats said.

There was no immediate reaction from Palestinian authorities to the delay. Palestinian President Mahmoud Abbas is due to address the Geneva forum on Feb. 27.

In recent weeks, Israeli Prime Minister Benjamin Netanyahu has approved the construction of some 6,000 settler homes in the West Bank and East Jerusalem, drawing Palestinian and international condemnation.

The administration of U.S. President Donald Trump, adopting a more measured tone than in previous pro-Israel announcements, said on Feb. 2 that building new settlements or expanding existing ones might not be helpful in achieving peace with the Palestinians.

Netanyahu said on Sunday he would present “responsible policies” in talks this week with Trump, signalling to the Israeli far-right to curb its territorial demands in the West Bank, which Israel captured in the 1967 Middle East war.