JAKARTA (Indonesia) - FROM the most Muslim nation on earth, President Barack Obama is reaching out to the Islamic world, declaring that efforts to build trust and peace are showing promise but are still clearly 'incomplete.'

Mr Obama on Wednesday will deliver one of the most personal and potentially consequential speeches of his presidency, reflecting on his own years of upbringing in Indonesia and giving an update on America's 'new beginning' with Muslims that he promised last year in Cairo.

At the same time, the path to lasting peace in the Middle East was hardly looking smoother. A reminder of that difficult road was waiting for Mr Obama when he landed here on Tuesday on a steamy afternoon in south-east Asia.

Israel's decision to build more apartments in east Jerusalem, a disputed territory claimed by Palestinians, had already earned a rebuke from American diplomats before a tired, traveling president weighed in himself.

'This kind of activity is never helpful when it come to peace negotiations,' Mr Obama said when questioned at a news conference alongside Indonesia's president, Susilo Bambang Yudhoyono. 'I'm concerned that we're not seeing each side make the extra effort involved to get a breakthrough. ... Each of these incremental steps can end up breaking down trust.'

Heavily invested and eager for Mid-east stability, Mr Obama insisted: 'We're going to keep on working on it.' Mr Obama's criticism came during a cherished, fleeting and twice-delayed homecoming in Indonesia. He cancelled plans to come earlier this year because of domestic troubles, and now he's dodging a big cloud of volcanic ash.

Obama reaches out to Muslims