Representatives of all the Palestinian factions began meeting in Cairo on Tuesday to discuss ways of implementing a stalled reconciliation deal, delegates said.

But officials played down expectations of a breakthrough, with Fatah delegation head Azzam al-Ahmed telling Agence France Presse he did not expect any agreement on the key issues of security and an interim government "before the end of January."

Iceland formally recognized the Palestinian state at a ceremony in Reykjavik, becoming one of the first Western European countries to do so

"This is the day I formally submit to you the declaration of Palestine independence in accordance with the will of the Icelandic parliament," Icelandic Foreign Minister Oessur Skarphedinsson said, addressing his Palestinian counterpart Riyad Maliki at a news conference.

Israel is to resume transferring millions of dollars in customs duties to the Palestinian Authority, public radio said Wednesday, but the prime minister's office said no decision had yet been taken.

Public radio reported that Prime Minister Benjamin Netanyahu's so-called Forum of Eight senior ministers had voted in favor of resuming the transfers, nearly a month after it froze them over Palestine's admission to UNESCO.

Jordan's King Abdullah II told visiting Israeli President Shimon Peres on Monday that Israel's settlement building on Palestinian land posed a "serious obstacle" to peace efforts, the palace said.

"Israel must stop unilateral measures, particularly settlement building, which is a serious obstacle to peace efforts," the king told Peres, who was in Amman on a brief and previously unannounced visit.

Israel is considering releasing tax money it has been withholding from the Palestinian Authority in response to their bid for UNESCO membership, Prime Minister Benjamin Netanyahu said on Monday.

Israel on November 1 announced it was freezing the transfer of the tax and tariff funds it collects on behalf of the Palestinians after they gained full UNESCO membership despite Israeli and U.S. objections.

Israel warned on Saturday that it would cut the supply of water and electricity to the Gaza Strip if rival Palestinian movements Fatah and Hamas form a unity government.

"The foreign ministry is examining the possibility of Israel pulling out of the Gaza Strip in terms of infrastructure," Deputy Foreign Minister Danny Ayalon told the daily Yediot Aharonot website.

Hamas is looking to focus its energies on popular resistance without giving up its right to wage armed struggle against Israel, the Islamist movement's leader Khaled Meshaal told Agence France Presse in an interview.

"Every people has the right to fight against occupation in every way, with weapons or otherwise. But at the moment, we want to cooperate with the popular resistance," the group's Damascus-based leader said in the interview late on Thursday.

Palestinian leader Mahmoud Abbas and Hamas chief Khaled Meshaal on Thursday hailed a new era of partnership between their two rival movements at talks in Cairo aimed at cementing a stalled a unity deal.

Speaking to reporters after several hours of talks, the two leaders said they had managed to iron out their differences and turn over a new page in their strained relationship.

Palestinian leader Mahmoud Abbas and Hamas chief Khaled Meshaal will meet in Cairo this week despite the unrest rocking Egypt, a senior Hamas official said on Tuesday.

The meeting between the exiled Hamas leader and Abbas, who heads the rival Fatah movement, will go ahead "as scheduled on Thursday," Hamas official Ismail Radwan told AFP.

Jordan's King Abdullah II on Monday landed in the West Bank city of Ramallah for talks with Palestinian President Mahmoud Abbas in his first visit in more than a decade.

His helicopter was greeted by a large official delegation as it touched down inside the presidential compound, the Muqataa, an Agence France Presse correspondent said.