Israel is optimistic about new peace talks with the Palestinians despite deadly violence in the Hamas-ruled Gaza Strip.
Israeli Prime Minister Benjamin Netanyahu says he is prepared for a "historic compromise" with Israel's Arab neighbors.
Israeli and Palestinian leaders will continue peace talks in Sharm el-Sheik, Egypt, on September 14 and in Jerusalem on September 15.
A U.S. State Department official said Israeli Prime Minister Benjamin Netanyahu, Palestinian President Mahmoud Abbas, U.S. Secretary of State Hillary Clinton and U.S. Middle East envoy George Mitchell will take part in the negotiations.
Briefing his Cabinet on last week's launch of direct peace talks with the Palestinians in Washington, Mr. Netanyahu said he believes the Arab world is ready for peace.
He said a creative, new approach is needed to resolve the core issues of the conflict that have caused the failure of negotiations in the past. Those issues include the status of Jerusalem, Palestinian refugees, Jewish settlements and the future borders of a Palestinian state.
Mr. Netanyahu called for Palestinian President Mahmoud Abbas to continue with him on the path toward peace, security and prosperity for Israelis and Palestinians.
But Mr. Abbas only rules the West Bank, and one of the key obstacles to the negotiations is the Palestinian militant group Hamas that rules the Gaza Strip. Hamas killed four Israeli settlers in a roadside ambush last week to express opposition to the peace talks, and on Saturday it fired a rocket at Israel.
Israel responded with air strikes on three Gaza smuggling tunnels. At least two Palestinians were killed.
Many observers say that as long as the West Bank and Gaza remain divided, the creation of a Palestinian state will