Secretary of State Hillary Rodham Clinton is strongly criticizing Israel for the demolition of a vacant but historic hotel in an Arab neighborhood of east Jerusalem, saying that the move undermines U.S. efforts to restart stalled peace talks.

In a statement released from Abu Dhabi, where she is beginning a tour of the Persian Gulf, Clinton said Sunday that the destruction of the Shepherd Hotel to make way for a new Jewish housing development "contradicts the logic" of Israel and the Palestinians negotiating a solution to their differences over Jerusalem, one of the most explosive issues in Israeli-Palestinian peacemaking. Clinton said the United States is "very concerned" about the demolition.

Conflicting claims to east Jerusalem, captured by Israel in 1967 and sought by the Palestinians as their future capital, have periodically spilled over into violence. Earlier Sunday, construction crews knocked down the Shepherd Hotel, built in the 1930s as the residence of the mufti of Jerusalem at the time, Haj Amin Husseini.