U.S. Middle East envoy George Mitchell says Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas have begun a "serious discussion on core issues" in peace talks.
The Israeli and Palestinian leaders sat down for a three-way meeting in Egypt Tuesday with U.S. Secretary of State Hillary Clinton.
Mitchell says the talks are moving in the right direction overall, but he gave no indication that progress has been made on the key issue of Jewish settlements. He says the common goal remains "two states for two peoples." The leaders will meet again Wednesday in Jerusalem.
Mitchell says the U.S. position on settlements remains unchanged. The Obama administration believes Israel should extend a 10-month partial freeze on construction that is set to end September 26.
Mr. Netanyahu has said his government will not extend the moratorium. But he has indicated that Israel will limit the scope of future building, not allowing "tens of thousands of housing units" as previously planned. Mr. Abbas has threatened to quit the peace talks if Israel resumes new construction on occupied territory.
After her arrival in Egypt Tuesday, Clinton met with Egyptian President Hosni Mubarak. She concludes her visit Thursday, with a meeting in Amman with King Abdullah of Jordan. Egypt and Jordan are the only Arab states to have made peace with Israel.
Tuesday's meeting in Sharm el-Sheikh follows a re-launch of direct negotiations in Washington earlier this month.
Some information for this report was provided by AP and Reuters.