Israel, Palestinians meet under settlement cloud

They said that talks began shortly before 7:00 pm (1600 GMT) and wound up just before midnight.

"The parties agreed to meet again within days," Haaretz daily's diplomatic correspondent Barak Ravid tweeted.

He quoted an Israeli official as saying the talks were "long and serious."

Israeli negotiator Tzipi Livni's office said earlier that there would be no statements or pictures from the meeting.

"Why?" tweeted spokeswoman Mia Bengel. "To allow the teams to work together, and not think about the media waiting outside."

Israeli television and newspapers said the meeting was held at an undisclosed location in Jerusalem.

"This evening the sides will try to complete discussion on the framework of the negotiations in order to start dealing with the core issues at the next meeting, which will take place in Jericho within the next two weeks," privately-owned Channel 10 television reported.

The US State Department said last week that the Jerusalem talks would be followed by a further round in the West Bank town of Jericho, Palestinian negotiator Saeb Erakat's hometown.

The meetings are the result of marathon efforts by US Secretary of State John Kerry, who nudged the sides to an initial meeting in Washington on July 30.

Ravid and state-owned Channel One TV said that contrary to expectations, Kerry's special envoy Martin Indyk was not at Wednesday's meeting.

Events were overshadowed by Israeli plans to build thousands of new homes for Jewish settlers on land which the Palestinians claim for their promised future state.

Israel freed 26 Palestinian prisoners on Wednesday but also pledged to keep up the pace of settlement building on occupied land.

Those released were the first batch of 104 prisoners, most of whom had been serving life terms for killing Israelis. They are to be freed in stages depending on progress in the talks.

But as Palestinians celebrated the releases, Housing Minister Uri Ariel cast a pall over proceedings.

"We will build thousands of homes in the coming year in Judaea and Samaria," Ariel told public radio, using the biblical Hebrew term for the West Bank.

"No one dictates where we can build... This is just the first course," he added, hinting at more building to come.

Earlier in the week plans were announced for 2,129 new settler homes -- the vast majority in annexed east Jerusalem.

The last direct peace talks broke down weeks after they were launched in September 2010 in a bitter row over settlements.

Commentators said the timing of the latest settlement announcements was aimed at appeasing hardliners in the right-wing coalition of Prime Minister Benjamin Netanyahu but could also be seen as a quid pro quo for the prisoner release.

In a bid to defuse tensions, Kerry phoned Palestinian president Mahmud Abbas late on Tuesday, a senior Palestinian official told AFP.

So far, both sides have remained silent over the agenda for the negotiations, while committing themselves to give the talks at least nine months in which to bear fruit.

Top-selling Israeli daily Yediot Aharonot was deeply sceptical.

"The issues that are at the core of the dispute are well known, as are Netanyahu's and Abu Mazen's positions," it wrote, using Abbas's nickname.

"Neither of them has any intention of budging from them."

Israel's hawkish Defence Minister Moshe Yaalon was also less than optimistic.

"We set ourselves nine months in which to try and reach something with the Palestinians -- we've been trying for 20 years since Oslo," he said, referring to 1993 interim peace accords.

"A note of scepticism might be detected in my words but we decided to give the negotiations a chance," he said.

The Hamas rulers of the Gaza Strip did not comment on the prisoner release but slammed Abbas's rival administration for entering talks with Israel.

"It is a national crime which will have serious consequences for our people and their rights and unity," said spokesman Fawzi Barhum.

Early Wednesday Israel bombed targets in northern Gaza after militants fired rockets across the border in the first such strike in seven weeks, the army said.

Iran, meanwhile, said it was "hostile" to the renewed talks.