THE Middle East peace process lay in tatters yesterday after Washington admitted defeat in its efforts to secure an Israeli freeze on settlement building, the Palestinians’ condition for resuming talks.

HAMAS militants yesterday traded a two-minute video showing an apparently unharmed captured Israeli soldier for 19 Palestinian women held in Israeli jails – the first tangible step toward defusing a key flashpoint in Israeli-Palestinian hostilities.

THE Israeli and Palestinian leaders shook hands at the start of their first face- to-face meeting yesterday, hosted by President Barack Obama, but the small gesture was unlikely to translate into a quick resumption of peace talks.