President Bush says he is encouraged by the latest Palestinian-Israeli cease-fire. He hopes the cease-fire will lead to talks to end nearly a year of bloodshed in the Middle East.

President Bush called the cease-fire a "glimmer of hope" in the Middle East that violence there might soon yield to negotiation.

The Israeli government withdrew from Palestinian areas and ordered an end to military operations against Palestinians after Palestinian leader Yasser Arafat reaffirmed his commitment to a self-declared cease-fire, telling his security services to hold their fire, even under attack.

President Bush says he is optimistic that the cease-fire might lead to "something positive" in the Middle East. He said U.S. officials are continuing to talk to Chairman Arafat to encourage him to "live up to his words" while working with Israel to encourage them to seize the moment.

"I would hope that Chairman Arafat backs up his strong statement with action," said Mr. Bush. "We take his words very seriously, that he is interested in doing everything he can to reduce terrorism and violence in the Middle East. That was a very positive statement he made and I hope he stays focused on the goal that he stated."

President Bush says his administration is clearly focused on last week's terrorist attacks in New York and Washington. But he said America is still "very much involved" in the Middle East, with Secretary of State Colin Powell urging regional leaders to seize this moment of calm between the Palestinians and Israelis to push for a comprehensive peace.

The United States has been pushing for a cease-fire at a time it is trying to lineup Arab support for its international coalition against terrorism. In a meeting with Indonesian President Megawati Sukarnoputri, President Bush said he hopes last week's violence somehow leads to greater momentum toward peace in the Middle East.

"Progress is being made," said Mr. Bush. "Madam President, I said at the time, through my tears I see opportunity. One of the opportunities I saw was the ability not only for freedom-loving nations to come together to say resolutely we will fight terrorism, but I felt like this event may shake up the attitudes in the Middle East where people would end-up resolving to show the world that there could be peace there as well, and progress is being made."

Israeli Foreign Minister Shimon Peres says he hopes to build on the ceasefire by meeting with Chairman Arafat in the next few days. The militant Palestinian groups Islamic Jihad and Hamas have both rejected the Palestinian leaders' call, saying Israeli aggression continues.