* Trump, Netanyahu have not asserted city's indivisibility

* US wants peace talks, but Palestinians angry with Trump

An Israeli cabinet minister said on Friday the phrasing of US President Donald Trump's recognition of Jerusalem as Israel's capital suggested openness to eventual Palestinian control of part of the city, though he predicted Israel would oppose this.

Trump's announcement reversed decades of US policy, angering the Arab world and alarming Western allies. But he also said Washington was not laying down a position on “final-status” issues including boundaries of Israeli sovereignty in Jerusalem, which the two parties would have to decide in negotiations.

Israel has long deemed Jerusalem its eternal, indivisible capital. Palestinians want East Jerusalem as the capital of a state they seek on land Israel took in a 1967 war. Its eastern sector is laden with Jewish, Muslim and Christian holy sites that inject deep religious sensitivities into the dispute over sovereignty.

In his speech on Wednesday, Trump did not include words echoing Israel's traditional description of Jerusalem. Asked about this, minister Zeev Elkin said: “I think that his leaving this out of the speech was premeditated.

“He even hinted that borders in Jerusalem will also be set as a result of negotiations, which presupposes an option of partition,” said Elkin, who holds the Jerusalem Affairs portfolio in Prime Minister Benjamin Netanyahu's government.

Elkin was referring to Trump's caveat that the new US decision on Jerusalem did not constitute “taking a position of any final-status issues, including the specific boundaries of Israeli sovereignty in Jerusalem, or the resolution of contested borders”.

“Those questions are up to the parties involved,” added Trump, who said Washington still wanted Israelis and Palestinians to agree on a “two-state solution” for peace.

Like other world powers, and in keeping with U.N. Security Council resolutions since the 1967 war, Washington had long held off on recognising any sovereignty in Jerusalem, one of the most treacherous issues in the Middle East conflict.

Elkin said he “would have been happy” had Trump described Jerusalem as Israel's united capital. But he played down any possibility of partition, saying Trump's administration would only pursue the idea if the Netanyahu government consented.

“ISRAEL WOULD NOT AGREE”

“This is a very, very important factor, and I currently have no doubt that Israel would not agree. Ultimately, in actuality, this is what matters,” Elkin said in his remarks, carried by Tel Aviv 102 FM radio.

Trump spoke of Jerusalem as “the capital the Jewish people established in ancient times (and) the seat of the modern Israeli government,” with freedom of worship for all faiths.

Palestinian President Mahmoud Abbas responded angrily, saying Washington had abdicated its role as peace mediator and deeming Jerusalem “a Palestinian, Arab, Christian and Muslim city, the eternal capital of the state of Palestine”.

Abbas used the Arabic term “Al Quds”, which he has generally qualified to refer to East Jerusalem rather than the whole city.

In three public statements welcoming the US move, Netanyahu has not asserted Jerusalem's indivisibility under Israel - heretofore stock rubric for him, as for previous prime ministers. A Netanyahu spokesman did not immediately respond to a Reuters query about the seeming omission.

Israel's ambassador to the United States, speaking before the Trump announcement, appeared to acknowledge that - in the eyes of foreign mediators, at least - Jerusalem being the Israeli capital may not rule out Palestinian sovereignty there.

“Every single peace plan that's ever been put down has Jerusalem be a capital of Israel,” Ron Dermer told Politico on Dec. 4. “There have been other peace plans that have suggested it be capital of two states, which is a separate issue.”

Israel annexed East Jerusalem after capturing it. But world powers and the United Nations have not recognised Israeli sovereignty over the entire city, saying it must be negotiated by Israel and the Palestinians, whose last peace talks collapsed in 2014. No other country has its embassy in Jerusalem.

Thousands of Palestinians protested in a “day of rage” on Friday in the occupied West Bank, Gaza and in East Jerusalem against Trump's move on the ancient city.