Palestinian PM Salam Fayyad, 19 Feb 2008

The U.S government has agreed to transfer $150 million in aid to the Palestinian government of President Mahmoud Abbas.

U.S. diplomat Jacob Walles signed the agreement Wednesday with Palestinian Prime Minister Salam Fayyad in the West Bank city of Ramallah.

The U.S. funds will be transferred directly to the Palestinian treasury to help the cash-strapped government pay civil servant salaries and fund daily operations.

In another development, U.S. Republican presidential candidate John McCain continued a tour of Israel today by visiting Sderot, a southern town frequently hit by Palestinian rockets.

U.S. Sen. John McCain, left, and Israeli Prime Minister Ehud Olmert, in Jerusalem, 19 Mar 2008

Senator McCain backed Israel's military operations against Gaza-based rocket squads, saying, in his words, "no nation can be attacked incessantly without responding."

An Israeli offensive against Gaza militants launched last month killed more than 120 Palestinians, including civilians.

U.N. Secretary General Ban Ki-moon condemned Israel for using what he called "disproportionate force" in the operation.

President Abbas briefly suspended peace talks with Israel to protest the offensive.

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