Seeking to advance a US-backed peace plan, National Security Adviser Condoleezza Rice held talks with the Palestinian prime minister on Saturday, a day ahead of an expected truce announcement by Palestinian militants.

US national security adviser Condoleezza Rice, center, shakes hands with Palestinian cabinet affairs minister Yasser Abed Rabbo as foreign minister Nabil Shaath, right, and Prime Minister Mahmud Abbas, 2nd left, look on prior to their talks in the West Bank town of Jericho , Saturday June 28 2003.[Reuters]

Prime Minister Mahmoud Abbas, in his four-hour meeting with Rice in the West Bank city of Jericho, pressed demands for the release of political prisoners held by Israel, a full withdrawal of Israeli troops from Palestinian territories and a freeze on Jewish settlement activity there, Palestinian Cabinet Minister Yasser Abed Rabbo said.

"The meeting was very positive," he said, with American officials showing an "understanding" for Palestinian demands.

Rice meets with Israeli Prime Minister Ariel Sharon on Sunday, when militant groups plan a formal announcement that they will halt attacks against Israelis for three months.

However, Mohammed al-Hindi, an Islamic Jihad leader in Gaza, said the formal announcement could be put off until Monday, if necessary.

Intensive meetings continued Saturday to work out the final wording of the truce announcement and to try to bring 10 smaller factions on board.

It also remains to be seen whether all militants will comply with a truce. The Al Aqsa Martyrs' Brigades in particular are composed of many rebellious armed gangs scattered throughout the West Bank and thought to be difficult to control.

Together with a preliminary agreement by Israel to withdraw troops from the Gaza Strip and West Bank town of Bethlehem, a truce could provide a major boost to the "road map" peace plan launched by President Bush at a June 4 Mideast summit.

Violence has plagued attempts to implement the road map, a blueprint to end 33 months of fighting and establish a Palestinian state by 2005. On Saturday, at least one vehicle in a convoy of US diplomatic cars traveling in Gaza was damaged after two explosive devices blew up, Israel's military said. No injuries were reported and US embassy officials refused to comment or give more details.

The Syrian-based leaders of the two main Islamic groups, Islamic Jihad and the larger Hamas group, agreed to a truce earlier in the week, according to a Palestinian legislator involved in the negotiations. But Gaza-based militants initially denied there was a deal, then said details remained to be worked out.

"We have accepted a conditional cease-fire for three months," al-Hindi told The Associated Press on Saturday, in the first on-the-record confirmation of the truce from a militant leader.

Ramadan Shalah, the main Islamic Jihad leader based in Damascus, told the Dubai-based Al Arabiya satellite channel that Islamic Jihad "has agreed with the Hamas movement and the Fatah movement to suspend military operations" against Israel. He said he expected an announcement Sunday.

Hamas leaders also have said they agreed to a truce but will only formally declare their acceptance in a joint document still being finalized.

The truce, first reported by the AP on Wednesday, applies to the West Bank and Gaza, as well as Israel, fulfilling a key Israeli demand.

Islamic Jihad, Hamas and Palestinian leader Yasser Arafat's Fatah faction continued negotiations Saturday to finalize the wording of the announcement.

And at least one of the smaller factions, the radical Popular Front for the Liberation of Palestine, appeared to be holding out approval, a Palestinian negotiator said on condition of anonymity.

A number of West Bank leaders, speaking in the name of the Al Aqsa Martyrs' Brigades, also complained in a statement that they had not been consulted on the deal. The Brigades are loosely linked to Fatah.

The emerging truce has received a lukewarm response from Israel and the United States, who say that armed groups should be dismantled as required by the road map. Palestinian officials fear a crackdown could trigger a civil war and have opted instead for persuasion.

The White House welcomed a preliminary agreement Friday to turn over security responsibility in Gaza and Bethlehem to the Palestinian Authority, calling it a "first significant joint step toward implementation of commitments" Israeli and Palestinian leaders made at the summit with Bush.

The road map requires that Israeli forces gradually withdraw to positions held before the outbreak of fighting in September 2000.

Israel was "cautiously optimistic" about the pullback arrangements, Foreign Ministry Spokesman Yonatan Peled said Saturday, but expected the Palestinian Authority to "keep a lid on terrorist activity emanating from the Gaza Strip."

The deal, reached in talks between Palestinian security chief Mohammed Dahlan and Israel's Maj. Gen. Amos Gilad, came with a pledge by Israel to halt targeted killings of wanted Palestinians - one of the militants' key demands for continuing with a truce.

Palestinians in turn agreed to act against what Israel calls "ticking bombs" - assailants on their way to attack Israelis. But Peled said Israel reserved the right to go after assailants themselves if Palestinians failed to do so.

Arafat's Fatah approved the deal at its weekly Saturday meeting. Details of how to implement it were to be worked out at meetings Sunday in Gaza and Bethlehem.

The progress in negotiations was accompanied by mounting pressure by Palestinians for guarantees regarding the release of prisoners.

A noisy crowd gathered outside of Abbas' office Saturday in the West Bank town of Ramallah, demanding he raise the issue with Rice.

Plunging into the crowd, Abbas demanded a loudspeaker and shouted: "There will be no peace or security if even one Palestinian prisoner remains behind bars. Be sure that we will exert our utmost in order to empty all prisons of prisoners."

Peled said Israel already has released some prisoners as a good-will gesture and was "definitely willing" to release more, "but only after we see some steps, some action, some responsibility" taken by Abbas.

Rice planned to continue talks with Palestinian officials on Sunday, while lower-level US, Israeli and Palestinian officials held separate trilateral meetings.

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