Israeli and Palestinian leaders to meet on Sunday

Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert will meet on Sunday, an aide to the Israeli leader confirmed today - keeping their promise to US Secretary of State Condoleezza Rice to hold regular talks.

Saeb Erekat, an Abbas confidant, said the Palestinians invited Olmert to meet in the West Bank town of Jericho, but Israeli officials said Jerusalem was more likely.

The two men last met on March 11 but pledged during a subsequent Rice visit to hold talks every two weeks.

The Palestinians want to head straight to the core issues dividing the two sides, such as the borders of a future Palestinian state, the status of disputed Jerusalem and Palestinian refugees' demands to return to land they fled or were driven from when Israel was established in 1948.

Olmert aides have said he would only talk to Abbas about security and humanitarian issues, as well as a "general political horizon" they did not define. Divisive issues could be addressed once Palestinians halt their rocket fire into Israel from Gaza and release an Israeli soldier captured in June, they said.

Hopes of progress toward releasing Cpl Gilad Shalit were dampened Tuesday when Olmert's office declared itself unhappy with a list of Palestinian prisoners the soldiers' captors want freed in exchange.

Palestinian Information Minister Mustafa Barghouti has said the list included Marwan Barghouti, who is serving five consecutive life terms in the murder of four Israelis and a Greek monk, and Ahmed Saadat, leader of small radical faction suspected in the 2001 assassination of an Israeli Cabinet minister.

In the past, Israel has hesitated to release Palestinians involved in fatal attacks, but has made exceptions. Public pressure has been building to make a deal for Shalit - and two other soldiers captured three weeks later by Lebanese guerrillas in a cross-border raid that set off an inconclusive 34-day war last summer.

After Abbas meets Olmert, he and Palestinian Foreign Minister Ziad Abu Amr plan to leave on a 10-day trip to Europe on a campaign to lift aid sanctions that have crippled their government.

Abbas aides said they hope to persuade their hosts to ease the blockade imposed after Islamic Hamas militants swept to power in January 2006 elections, now that a new unity government adding members of the more pragmatic Fatah has recently taken office.

Palestinian Finance Minister Salam Fayyad met EU officials in Brussels on Wednesday and later told reporters that the new Palestinian government would need €1bn in international aid this year.

"We are looking for donor support to bridge the gap of €1bn for 2007," Fayyad said after meeting with EU External Relations Commissioner Benita Ferrero-Waldner. "This is assistance we need to get back on our feet."

Also on Wednesday, the military's civil administration posted an order on a house in the West Bank city of Hebron ordering Jewish settlers to leave, but giving them 15 days to appeal - the start of a legal process that could take weeks or months.

Dozens of Israelis moved into the house in an Arab neighbourhood on March 19, saying they bought it from Palestinians. Israeli Defence Minister Amir Peretz said the settlers had not requested Israeli government authorisation to live there and would be ordered to leave.

"In my opinion there is no reason why the presence in the house should continue, therefore I intend to exercise my authority and have them removed," Peretz told Israel Radio.

The settlers council said in a statement Wednesday it would fight Peretz's decision "with all its might."

Hebron is believed by Jews and Muslims to be the burial site of biblical patriarchs and is a frequent flashpoint. Israel controls the city centre, where about 500 settlers live in heavily-guarded enclaves among about 160,000 Palestinians. The Palestinians control the rest of the city.