But it also could boost the prospects of a popular candidate who reportedly wants to run for the presidency from his Israeli prison cell.

Abbas blamed his decision on the stalemate in peace talks, but the wording of his televised speech raised speculation that it was not final and could be a tactic for pushing Israel and the U.S. toward a larger compromise.

He said only that it was "desire not to run in the upcoming elections" which are set for January but could be delayed, extending his current term indefinitely.

Abbas took over after the death of Yasser Arafat in 2004, and Western leaders have come to see him as a symbol of moderation. Although criticized as indecisive and associated with the corruption-tainted old guard of his Fatah party, he has given free rein to his prime minister, Salam Fayyad, to reform the West Bank's economy and boost its police, which has resulted in a limited economic upturn.

But the stalemate with Israel overshadows all, and Fatah activists say the party is in a panic, fearing a fragmented slate of candidates that would hand victory to Hamas.

Late last month, Abbas told U.S. Secretary of State Hillary Rodham Clinton that he would not run, but recanted after President Obama called him and expressed his commitment to Mideast peacemaking, Abbas' aides said. A senior Palestinian official told the Associated Press that Abbas informed other Fatah leaders of his latest decision several days ago but didn't tell Obama.

Insiders say he was disheartened by Washington's refusal to press Israel harder for a freeze on West Bank settlement construction, and that this week's visit by Clinton, when she appeared to side with Israel over the settlement issue, was the last straw.

Abbas has insisted that he won't resume negotiations until Israel stops all construction.