JERUSALEM (AFP) - White House candidate Barack Obama lauded the "miracle" of Israel on Wednesday, as he met top officials and paid homage to Holocaust victims on the latest leg of his international campaign swing.

The Democratic senator, on a sprint through the Middle East and Europe designed to convince American voters of his presidential mettle, also travelled to the West Bank to consult Palestinian leaders on sluggish peace moves.

He angered Palestinians last month by saying an undivided Jerusalem must remain Israel's "capital", while the Palestinians want the occupied eastern sector of the city as the capital of their promised future state.

Obama opened his day with talks with Israeli Defence Minister Ehud Barak, who was later set to join him on a helicopter tour of Israel's cramped topography, a rite of passage for potential US presidents.

He also toured Yad Vashem Holocaust memorial to the six million Jews who perished under the Nazis.

Wearing a white kippa, Obama laid a wreath at the Hall of Remembrance, where ashes recovered from Nazi extermination chambers are interred.

The memorial reminded him of "the core qualities of humanity that the Holocaust raises," he told reporters. "Man's great capacity for evil, and capacity to stop it. This is a place of hope."

Obama, who leads Republican rival John McCain in most opinion polls, also paid his respects to president Shimon Peres, saying he had been a key player for most of Israel's 60 years.

"You have been deeply involved in this miracle that has blossomed and we are extraordinarily grateful not just as Americans but as world citizens for your outstanding service to your country," Obama said.

Later Wednesday, Obama was due in Sderot, a southern Israeli town that has long been in the firing line of rockets and mortars from the Hamas-controlled Gaza Strip.

Obama, who has promised to work for peace from his first day in office, if elected, later travelled in a motorcade to Ramallah for talks with Palestinian president Mahmud Abbas.

On Tuesday, he said peace hopes were dimmed because Palestinian politics was divided between Abbas's secular Fatah party and the Islamists of Hamas, and turmoil was wracking Israel's fragile government.

"It is a very difficult process. There is a lot of history that exists between those two people. That history is not going to vanish overnight. "So I think it's unrealistic to expect that a US president alone can suddenly snap his fingers and bring about peace in this region."

Many Palestinians welcome the change that Obama might represent after eight years with little to show from the administration of George W. Bush, but they think its unlikely he will bring about an end to the decades-old conflict.

"Change is good. Maybe Obama understands the Palestinian issue, but the question is whether he will do anything about it," said one east Jerualem resident, Munir Kort.

Despite the round of presidential-style meetings, Obama's team insisted he would not attempt to interfere in current US policy on the Middle East in his meetings.

"The United States of America has one president at a time, that president is George W. Bush, so he will not be engaged in any shape or form in negotiations or policymaking or the like," said Obama foreign policy aide Susan Rice.

Although Obama is trying to forge early ties with foreign leaders, much of the audience for his trip is back at home, and he is being especially watched by the powerful American Jewish community.

Unlike Europe, where "Obamamania" is rampant, some Middle Eastern governments and opinion makers are more circumspect.

"Our problem with Obama is not his views... rather, his priorities are our problem. The Israeli issue is simply not urgent for him," said columnist Yair Lapid in Israel's Yediot Aharonot newspaper.

The left-leaning Haaretz ran a blunt headline: "Obama visiting Israel to impress Jewish voters not Israelis."

The Illinois senator has so far yet to score the near 80 percent support among Jewish Americans enjoyed by such previous Democratic candidates as Bill Clinton, Al Gore and John Kerry.

Obama, who has already visited Kuwait, Afghanistan, Iraq and Jordan, heads on to three stops in Europe, beginning with Berlin on Thursday.

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