First tentative steps to Middle East peace deal?

Israeli and Palestinian leaders last night agreed to produce a framework for a permanent peace deal and to hold a second round of direct talks this month.

The deal was hailed as a modest achievement reached amid deep scepticism about success at their first meeting in two years.

Israeli prime minister Benjamin Netanyahu and Palestinian president Mahmoud Abbas will meet again on 14-15 September in the Middle East, probably at the Egyptian resort of Sharm el-Sheik, with a view to outlining a pact that could lead to a final resolution in a year's time.

The United States' special Mideast envoy George Mitchell announced the agreement after several hours of talks between Mr Netanyahu and Mr Abbas at the State Department at which the two pledged to work to resolve the long-running conflict.

"I believe these two leaders - president Abbas and prime minister Netanyahu - are committed to doing what it takes to achieve the right results," Mr Mitchell said. He refused to discuss specifics of what the framework agreement would entail but said it would lay out the "fundamental compromises" needed.

Those compromises will involve the thorniest issues that have dogged the parties for decades: the borders of an eventual Palestinian state, the status of Jerusalem, the fate of Palestinian refugees and security.

Mr Mitchell said both he and US secretary of state Hillary Clinton would be at the next round. Diplomats said it will likely also include other officials from the "Quartet" of Mideast peacemakers - the US, the United Nations, Russia and the European Union.

Earlier, Mrs Clinton opened the talks with an appeal for the two leaders to overcome a long history of failed attempts to resolve the conflict and make the compromises needed for peace.

"I know the decision to sit at this table was not easy," said Mrs Clinton, who with Mr Mitchell has been working to relaunch talks stalled for 20 months. "But, by being here today, you each have taken an important step toward freeing your peoples from the shackles of a history we cannot change and moving toward a future of peace and dignity that only you can create," she said. Flanked by Mr Abbas and Mr Netanyahu, Mrs Clinton said president Barack Obama's administration was committed to a settlement. She stressed, though, that the heavy lifting must be done by Mr Netanyahu and Mr Abbas with support from the international community, particularly the Arab and Israeli people.

Mr Netanyahu and Mr Abbas vowed to work together but each outlined concessions required from the other. "I see in you a partner for peace," Mr Netanyahu told Mr Abbas. "Together we can lead our people to a historic future that can put an end to claims and to conflict."

Yesterday's negotiations are the first since the last effort broke down in December 2008. They are opposed by Hamas, the Palestinian militant group that controls the Gaza Strip. On Tuesday four Israeli West Bank residents were killed by Hamas gunmen. On Wednesday, another two were wounded.

Hamas rejected the talks. "These talks are not legitimate because the Palestinian people did not give any mandate to Mahmoud Abbas and his team to negotiate on behalf of our people," said Sami Abu Zuhri, a Hamas spokesman. "

Bones of contention

TWO-STATE SOLUTION

Barack Obama is pushing for an agreement that would create a state for the Palestinians in the West Bank and Gaza Strip alongside Israel. Israeli Prime Minister Benjamin Netanyahu has said a Palestinian state must be demilitarised, to insure Israel is not threatened.

ISRAELI SETTLEMENTS

Palestinian President Mahmoud Abbas has called for a total freeze on the expansion of settlements. Mr Netanyahu imposed a ten-month halt to new housing starts in West Bank settlements that expires on 26 September. The Palestinians consider the settlements illegal.

JERUSALEM

Palestinians want East Jerusalem, which includes the Old City and its sites sacred to Muslims, Jews and Christians, to be the capital of the state they aim to establish in the West Bank and Gaza Strip. Netanyahu has said Jerusalem would remain Israel's capital.

REFUGEES

Palestinians have long demanded refugees should be allowed to return, along with millions of their descendants. Israel opposes this, but the Palestinian side seems willing to bargain.