By Alexander Cornwell

JERUSALEM (Reuters) -U.S. Ambassador Mike Huckabee said on Wednesday that growing international momentum to recognize a Palestinian state directly led to the collapse of U.S. efforts to persuade Israel to release much-needed funds to the Palestinian Authority.

Huckabee said he had been "shuttling back and forth" between the two sides, partly out of concern that worsening economic instability in the West Bank could spark violence, but that momentum towards recognition had hardened Israeli positions.

The Palestinian Authority exercises limited civic rule in the Israeli-occupied West Bank.

"I felt like we were making progress. We weren't quite there yet, but we were talking, and there was progress, and there was understanding of the importance of getting it resolved," Huckabee said in an interview with Reuters in Jerusalem.

When asked whether the Palestinian funds that Israel had blocked from transferring would remain on hold indefinitely, Huckabee said that........

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