Hopes for reviving a stalled Middle East peace plan were buoyed on Monday as Israel and the Palestinians held US-brokered negotiations and militants prepared for a new round of ceasefire talks. 

The new diplomatic initiatives moved forward despite fresh violence in the Gaza Strip, where Israeli forces raided a refugee camp and killed two unarmed Palestinians.

US State Department official David Satterfield oversaw a meeting in Jerusalem on Monday between senior Israeli and Palestinian officials, arranged after a weekend of intensive efforts to restart a stalled US-backed peace "roadmap."

US and Palestinian officials said the talks sought ways to ease a Palestinian economic crisis. But Israeli sources say they might also pave the way for a summit between Prime Minister Ariel Sharon and his Palestinian counterpart, Ahmed Qurie.

"The good thing is that the two sides are talking," a Western diplomat said, adding expectations for significant progress are low.

Egyptian mediators, meanwhile, are having new negotiations with militants after talks in Cairo on suspending attacks against Israel collapsed last week, Palestinian sources said. A truce is seen as crucial to reviving the roadmap.

The two-day talks held in Gaza City, which will end today, involve Hamas, Islamic Jihad and other factions that have spearheaded a suicide bombing campaign during a 3-year-old uprising.

Watched by Washington, Qurie and Egyptian mediators had been pushing militants to accept a full ceasefire to halt all attacks on Israelis but Hamas - which wanted Israel to reciprocate - refused. The talks broke down on December 7.

"We have not given up. We will continue to work to reach a comprehensive ceasefire," an Egyptian official said.

A Palestinian source said two major-generals heading the Egyptian delegation would "convey a message from Washington" to the militants. Israeli officials made no comment.

US State Department spokesman Richard Boucher said Satterfield's talks focused on checkpoints and movement for Palestinians, among other issues.

"The meeting was intended to encourage both sides to consider a set of constructive and useful steps that will help us move forward with an agenda aimed at improving Palestinian lives," Boucher said in Washington.

Separately, a senior State Department official, who asked not to be identified, said it was significant the Israelis were willing to sit down and hold practical talks with the Palestinians. "That, in and of itself, doesn't create progress on some of the tough issues on the roadmap, particularly ending the violence, but it does help lead to the prospect of some movement," the official said.

US and Palestinian officials said the talks with Israel on Monday, with European donor nations attending, focused on economic issues, not the peace plan. Yet, Israeli officials saw implications for the flagging peace process in the new contacts.

The Palestinian economy has been crippled by three years of Israeli military blockades, which Israel says are meant to stop suicide bombers but Palestinians call collective punishment.

Dov Weisglass, Sharon's chief of staff, led the Israeli team and Palestinian chief negotiator Saeb Erekat headed the Palestinian delegation, political sources said.

(China Daily December 17, 2003)