Hamas and Fatah call off talks on unity government

Rivals Hamas and Fatah called off top-level talks on forming a Palestinian coalition government that might ease crippling international sanctions, the latest difficulty in bridging formidable ideological differences.

With the Palestinians stuck, another channel for Mideast progress appeared to open when Israeli media reported that Prime Minister Ehud Olmert had a secret meeting with a senior official from Saudi Arabia. Both sides predictably denied the reports, as they have no official relations.