Olmert, Abbas hold talks in Jerusalem

Israeli Prime Minister Ehud Olmert met with Palestinian Authority President Mahmoud Abbas on Saturday in Jerusalem in the first substantive talks in person between the two leaders in almost two years.

The meeting, which lasted nearly two hours at Olmert's official residence, revived hopes for peace talks after years of hostility and distrust.

Olmert agreed to release $100 million in frozen Palestinian funds and ease travel restrictions in the West Bank, Palestinian negotiator Saeb Erekat said following the meeting.

The two sides agreed last month to a fragile truce to end a five-month Israeli military offensive and the firing of rockets by Palestinian militants into the Jewish state.

Israel launched its offensive after Hamas-linked militants staged a cross-border raid in June and captured an Israeli soldier, who was still being held.

No agreement was reached on a release of Palestinian prisoners, but the two sides agreed to discuss the issue further.

The Palestinians wereto releaseon Sundaythe names of prisoners they want to see let go, Erekat said.

Israel had frozen the transfer of tax rebates and other funds to the Palestinians after the Islamic militant Hamas came to power in March. In the Olmert-Abbas meeting, the Israeli leader said he would release $100 million of those funds for humanitarian needs.

Olmert also agreed to remove several West Bank roadblocks in coming days, according to a list that the Palestinians submitted to Israel, Erekat said.

The Israeli leader also promised to meet a quota of 400 trucks moving through the main cargo crossing between Gaza and Israel, the negotiator said.