Washington, Aug 19 (DPA) US President Barack Obama said Tuesday he has seen some encouraging sign of progress in the Middle East that could help move toward achieving an Israeli-Palestinian peace deal.

Obama noted Tuesday's announcement by the Israeli government that construction permits for new settlements in East Jerusalem have not been issued for months. He also cited the improvement of Palestinian security forces and the economy in the West Bank and the removal of some Israeli checkpoints.

'I'm encouraged by some of the things that I'm seeing on the ground,' Obama said during a meeting with Egyptian President Hosny Mubarak, who was making his first visit to Washington in five years.

Obama and Mubarak's discussion focused on the Israeli-Palestinian conflict and Arab support for reaching a settlement. They also touched on Iraq, Iran's nuclear programme, reform and bilateral issues.

'We have perhaps focused greatly on the Palestinian issue because it's the pivotal issue,' Mubarak said through a translator. 'And Palestinian issue has impact on the world, on the region, whether for the West or also for the United States.'