The parents of killed US journalist James Foley have said they regarded an email from his captors last week as a hopeful sign they could negotiate with the Islamic militants holding him.

US President Barack Obama has pledged to continue attacking the group responsible for the death of journalist James Foley, despite its threats to kill another American hostage.

A grisly video shows Islamic State militants beheading American journalist James Foley, US officials said, in what the extremists called retribution for recent US airstrikes in Iraq.