Israel's Netanyahu makes first move for new government By Allyn Fisher-Ilan JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu took a first step in forming a new government on Tuesday, announcing a coalition deal with former Foreign Minister Tzipi Livni and naming her to handle efforts to renew stalled diplomacy with the Palestinians. Netanyahu's choice of Livni, a moderate voice for a government led by his right-wing Likud party, seemed a positive signal ahead of U.S. President Barack Obama's visit next month on a push to resume peace talks deadlocked since 2010. In televised remarks, Netanyahu said the union with Livni, a longtime rival, was intended to provide his emerging government with a "wide and stable government that unites the people." He said he wanted to face down what he called "tremendous challenges" posed by a nuclearising Iran and the violence of neighboring Arab revolts. Netanyahu said Israel had to "make every effort to promote a responsible peace process with the Palestinians," adding that he hoped for resumption of talks that froze after a dispute over Jewish settlement building. Without expressly giving a title for her new diplomatic role, Netanyahu said Livni would become a "senior partner in the effort" to revive Middle East diplomacy. She would also become justice minister, a job Livni has also held previously. The coalition union with Livni's six-member faction will likely ratchet up pressure on Israel's other fractious centrist and religious parties to come on board Netanyahu's emerging new government as well. After winning a January 22 election, though short of a majority in parliament, Netanyahu has another month to secure enough coalition partners to control at least half of the legislature's 120 seats so that he can govern. Livni, 54, said she had decided to join Netanyahu's next government "because of a strategic and moral imperative to leave no stone unturned, to exhaust any possibility and become a part of any government that commits to bringing peace." As foreign minister in 2006-2009 with the centrist Kadima party, Livni headed inconclusive talks with the Palestinians. She formed her own party last year after quitting Kadima following a lost leadership contest. Livni had rejected Netanyahu's offers to join his current government formed after a 2009 election, amid disputes over policy and jobs, after her party polled the most seats though Netanyahu mustered more political allies than she could. Netanyahu said they had agreed "we need to set our differences aside and overcome old rivalries and combine forces for the sake of the country." Additional reporting by Ari Rabinovitch; Editing by Michael Roddy