President Obama, stepping into an Israeli-Palestinian dispute during a homecoming visit to the world's largest Muslim majority nation, criticized...

JAKARTA, Indonesia — President Obama, stepping into an Israeli-Palestinian dispute during a homecoming visit to the world’s largest Muslim majority nation, criticized Israel on Tuesday for its decision to advance the approval of some 1,000 new housing units in East Jerusalem during a sensitive time in the peace negotiations with the Palestinians.

Obama arrived here Tuesday from India on a long-awaited visit that was cut a few hours short so the president could avoid a cloud of volcanic ash from the eruptions of Mount Merapi.

In an address to University of Indonesia students in the country where he spent four years of his childhood, Obama was greeted with thunderous cheering when he opened with a traditional Muslim greeting “salaam aleikum” and used Indonesian phrases. Obama took office pledging a “new beginning” in relations with Muslims, and he traveled to Cairo less than six months after becoming president to make his first high-profile speech to the Islamic world. But many Muslims have been disappointed by his inability to push Israel and the Palestinians toward peace and have watched uneasily as he escalated the U.S. military presence in Afghanistan.

A reminder of that difficult road was waiting for Obama when he landed here Tuesday on a steamy afternoon in Southeast Asia. Israel’s decision to build more apartments in east Jerusalem, a disputed territory claimed by Palestinians, earned a rebuke from Obama.

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“This kind of activity is never helpful when it comes to peace negotiations,” Obama said when questioned at a news conference alongside Indonesia’s president, Susilo Bambang Yudhoyono.

Israeli Prime Minister Benjamin Netanyahu responded to Obama by asserting in a statement that “Jerusalem isn’t a settlement — Jerusalem is the capital of Israel.”

Earlier, Obama visited the Istiqlal Mosque, the largest in Southeast Asia. He noted that it was under construction when he lived in Indonesia as a boy from 1967 to 1971.

Seeking to cement relations with fast-growing Asian trading partners, Obama also paid tribute to the economic dynamism of the region at a time of global financial stress.

“America has a stake in an Indonesia that is growing, with prosperity that is broadly shared among the Indonesian people — because a rising middle class here means new markets for our goods, just as America is a market for yours,” he said.

Obama’s words came in advance of a meeting of the Group of 20 major economic powers that begins Wednesday evening in Seoul, South Korea. The meeting is expected to be marked by trade tensions between the United States and major exporting nations such as China and Germany.