WASHINGTON (Reuters) - U.S. President Barack Obamasaid on Friday he saw "enormous hurdles" ahead in Middle Eastpeace negotiations, but said it was a risk worth taking and theUnited States would remain engaged even if talks break down.

"There are enormous hurdles between now and our endpoint,"Obama said at a news conference.

Obama said the talks between Israeli Prime MinisterBenjamin Netanyahu and Palestinian President Mahmoud Abbas, whoare due to meet again in Egypt on Sept. 14-15, represented achance to realize the goal of an independent Palestinian stateliving side by side in peace with a secure Israel.

"The two parties need each other. That doesn't mean it'sgoing to work. Ultimately it's going to be up to them," Obamasaid.

"I remain hopeful but this is going to be tough," Obamasaid. "It's a risk worth taking because the alternative is astatus quo that is unsustainable. And so if these talks breakdown, we're going to keep on trying."

Obama said he had told Netanyahu that it made sense toextend a moratorium on settlement construction for as long asMiddle East talks are constructive.

Obama said a successful peace deal between Israel and thePalestinians could "change the strategic landscape in theMiddle East" and help U.S. efforts to pressure Iran over itsnuclear program.

"This is something in our interests. We're not just doingthis to feel good. We're doing it because it will help secureAmerica as well." (Reporting by Washington newsroom; editing by Tim Dobbyn)