HIGHLIGHTS: No Breakthroughs But Two Sides Emphasize Importance of Keeping the Talks Going||Bush Calls Israeli & Saudi Leaders||Israel Agrees to Unfreeze Funding it Owes to the Palestinian Authority||400 American Jews Immigrate to Israel||A So-called New Palestinian Movement Calls for a Confederation with Israel|| STORY: Israelis and Palestinians voiced a hope their first round of high-level talks in many months would help to ease 21 months of violence and eventually clear the way for making Middle East peace.

While peace "looks distant at this time, it seems to me that maybe some type of window has been opened," Israeli Prime Minister Ariel Sharon said after his foreign minister, Shimon Peres, launched the high-level talks with Palestinians. (Read photo caption)

Both sides said two days of meetings between Peres and Palestinian officials, including new Interior Minister Abdel-Razak al-Yehiyeh, were not peace negotiations and brought no major breakthroughs.

But they agreed to continue their meetings to try to end the bloodshed. Palestinian negotiator Saeb Erekat said their talks covered a broad range of topics, including political, economic and security issues.

BUSH CALLS SHARON, SAUDI

The White House on Tuesday said President Bush had spoken by telephone to Sharon and Saudi Crown Prince Abdullah, whose country has offered a regional peace blueprint, and urged them both to pursue peace, but gave no details.

Meanwhile and in an apparent effort to improve conditions for the Palestinian people, Israeli Prime Minister Ariel Sharon, Foreign Minister Shimon Peres, Defense Minister Binyamin Ben-Eliezer, and Finance Minister Silvan Shalom agreed Tuesday to unfreeze funding Israel owes the Palestinian Authority.

The four ministers agreed that the funds must be provided in a way that ensures no money goes to fund what they call terrorism. But they did not decide whether Israel should accept an American request to transfer the funding directly to the PA under international supervision, or provide the funding in an alternative manner directly to the Palestinian people.

The move comes as part of the Israelis describe as measures to ease the hardships to Palestinians from Israeli occupation army blockades, curfews and the military reoccupation of Palestinian-ruled cities in the West Bank.

AMERICAN JEWS MOVING TO ISRAEL

Meanwhile, nearly 400 Americans moved to Israel Tuesday to build new lives in the Jewish state - the largest single group to arrive in years.

Observers say, more than 21 months of fighting and a worsening economy have kept many immigrants away. There were 45,000 newcomers to Israel last year, compared with 60,000 in 2000, according to the Jewish Agency, a quasi-government group that brings immigrants to Israel.

Essential for others were grants of 5,000 U.S. dollars each donated by American Evangelical Christians, who want to encourage Jews to live in the Holy Land .

PALESTINIAN MOVEMENT CALLS FOR CONFEDERATION WITH ISRAEL

At the same time, a so-called new movement calling itself "The National Movement for Palestinian Solidarity" published an article in the Jordanian al Hillal newspaper Tuesday calling for a confederation between Israel and the Palestinians and for sharing Jerusalem as joint capital.

The new movement, whose members and leaders were not identified, called upon Palestinian Authority Chairman Yasser Arafat to resign. It said it wants peace with its neighbors, and said it would form a new government.

Palestinian officials said they did not know about the new party. Israel Radio reported that the movement operates abroad, but has members from the Palestinian areas.

According to Arafat aide Bassam Abu Sharif, the ad and similar comments by Palestinians like senior Fatah member Abbas Zakki from Hebron, who also called upon Arafat to resign this week, are means to pressure Arafat to move forward with the reforms.

"This is part of democracy and is healthy," Sharif said. "Some call for Arafat's resignations and many more will vote for him again," he added.

He called upon US President George W. Bush and members of the international quartet on the Middle East who are due to meet on July 15 in London to push for an Israeli withdrawal so that the Palestinians can hold free elections. He urged them to send international observers to make sure the elections will be fair and democratic.

GHASSAN BARHAM, TO CHALLENGE ARAFAT

Meanwhile, Ghassan Barham, A 50-year-old Palestinian lawyer, said yesterday he would use an anti-corruption platform for a presidential election challenge to Arafat.

Barham entered the race against Arafat along with Abdel-Sattar Qassem, an academic with Islamic leanings, and former Palestinian police commissioner Ghazi al-Jabali.

Barham told Reuters he was unimpressed by a high-level reshuffle of the Palestinian Authority by Arafat who trimmed his cabinet, appointed new ministers and sacked security chiefs under internal and international pressure for reform.

PHOTO CAPTION

American Merrill Lynch executive Alan Leventen, who is serving as a short-term volunteer in the Israeli Army, patrols with Israeli soldiers looking for Palestinians illegally crossing a stretch of Israel's border with the West Bank in Jalameh, Israel, Tuesday, July 9, 2002. Leventen, 49, who survived the Sept. 11 attack on the World Trade Center says he volunteered to help stop terror attacks against Israel. (AP Photo/Brennan Linsley)
- Jul 09 6:33 PM ET