Israel and the Palestinian Authority agreed today to a series of meetings after breaking the ice at their first high-level talks in months, pushing ahead despite a Palestinian gunman's attack on Israeli police in Jerusalem.
A Palestinian bystander was killed in a shootout as police chased the attacker near Jerusalem's walled Old City. Palestinian sources also said Israeli forces killed a West Bank militant, but Israel denied any knowledge of the incident.
Despite low expectations after 21 months of conflict, the resumption of dialogue provided a rare glimmer of hope that the two sides may be able to revive peacemaking.
Israeli Prime Minister Ariel Sharon said that while peace "looks distant at this time, it seems to me that maybe some type of window has been opened."
Both sides said two days of meetings between Israeli Foreign Minister Shimon Peres and Palestinian officials, including new Interior Minister Abdel-Razak al-Yehiyeh, were not peace negotiations and they brought no major breakthroughs.
Mr Peres' office said: "The meeting was good. Both sides recognized the importance of continuing to talk."
Palestinian negotiator Mr Saeb Erekat called for a resumption of full peace talks after meeting Peres in Jerusalem.
"We hope that the ultimate end result is not just the mere fact that we are meeting but that we can do something...that we can revive the peace process," he said.
Political sources said Israel had agreed to set up a committee to discuss the matters raised during the talks and that it would study the possibility of releasing Palestinian funds held in Israeli state coffers since the violence began.
Such a move would be part of measures to ease the hardships to Palestinians from Israeli army blockades, curfews and the military reoccupation of Palestinian-ruled cities in the West Bank which Israel says is needed to block suicide bombers.