Israeli Prime Minister Ehud Olmert delivers his speech during a seminar at a Tokyo hotel, 26 Feb 2008

Israeli Prime Minister Ehud Olmert says Israel will continue to build in occupied east Jerusalem despite international concern that such action may harm the Mideast peace process.

Israel plans to build hundreds of new apartments in Har Homa, a Jewish neighborhood in a part of Jerusalem claimed by the Palestinians as the capital of a future Palestinian state.

Mr. Olmert said Monday there is, in his words, "no chance" Israel will give up a neighborhood like Har Homa.

Israeli Foreign Minister Tzipi Livni and chief Palestinian negotiator Ahmed Qureia resumed peace talks Monday in Jerusalem despite disagreements about Israel's construction plans.

It was their first publicly-acknowledged meeting since Israel began a military offensive against Gaza militants last month.

Palestinians carry the body of 21-month-old baby girl Salsabeel Abu Jalhoum, killed in an Israeli airstrike, during her funeral in Jebaliya refugee camp, 02 Mar 2008

Palestinian President Mahmoud Abbas briefly suspended the talks to protest the Israeli offensive, which killed at least 120 Palestinians, including civilians.

Israel launched the offensive in response to increased rocket fire by Gaza-based militants on towns in southern Israel.

Livni said Monday that Israel will not use terrorism as an excuse to avoid negotiations with Mr. Abbas' government.

Mr. Olmert also said that Israel will keep building in places that it plans to keep in the future, especially in Jerusalem. Israel has said it expects to retain major settlement blocs in the occupied West Bank under any peace deal with the Palestinians.

The international "road map" peace plan calls for Israel to halt all settlement activity and for the Palestinians to disarm militants. The United States has called on both sides to do more to honor their road map commitments.

Some information for this report was provided by AFP, AP and Reuters.