WRAPUP 5-Obama opens Mideast summit clouded by W.Bank attack

* Hamas declares war on peace process

* Obama starts talks with Netanyahu meeting

* US, Israel, Abbas: attack will not derail peace effort (Adds Obama meeting Netanyahu)

By Matt Spetalnick and Jeffrey Heller

WASHINGTON, Sept 1 (Reuters) - U.S. President Barack Obama waded into a new round of Middle East diplomacy on Wednesday, seeking momentum for revived peace talks clouded by a flare-up of West Bank violence and a deadlock over Jewish settlements.

Obama met Israeli Prime Minister Benjamin Netanyahu as he launched a series of one-on-one meetings with Middle East leaders attending a U.S.-led peace summit that will culminate on Thursday with the first direct Israeli-Palestinian talks in 20 months.

With Obama's peace bid facing broad skepticism and the clock ticking toward the Sept. 26 expiration of an Israeli settlement construction freeze, Israel's defense minister sounded a conciliatory note about the prospects for sharing Jerusalem, an issue at the heart of the decades-old conflict.

But big obstacles remain to Obama's quest for a peace deal that eluded so many of his predecessors.

Hamas militants declared war on the talks even before they began, killing four Jewish settlers in the occupied West Bank on Tuesday, vowing more attacks and underscoring the threat hard-liners pose to the fragile peace process.