Israeli Prime Minister Ehud Olmert has cautioned against expectations of a breakthrough with the Palestinians at an upcoming U.S.-sponsored peace conference.

Mr. Olmert made the comment during a speech Thursday in Israel to Jewish fundraisers. He said he will meet with Palestinian President Mahmoud Abbas in Jerusalem on Friday to discuss preparations for the conference - but said the conference is "not made to be an event for the declaration of peace."

The two sides are working to narrow differences on a joint document to be presented at the conference in Annapolis, Maryland. The Palestinians want a detailed document addressing core issues, while Israel is seeking a general statement of principles.

In other developments, Israeli Defense Minister Ehud Barak approved a plan to cut power supplies to the Gaza Strip in response to cross-border rocket fire by Palestinian militants.

Palestinian officials have condemned the plan as a violation of international law.

It was not immediately clear when the measure will take effect.

Israel declared the Gaza Strip an "enemy entity" in September, opening the way for cuts in vital supplies to the Palestinian territory controlled by the militant group Hamas.

Also Thursday, President Abbas said Hamas members have met with Israeli officials in an effort to bring calm to the region. Israel categorically denied such meetings had taken place.

In Gaza Thursday, Hamas said Israeli soldiers killed two of its members in a clash near the southern town of Khan Younis.

Israel withdrew its troops and settlers from the Gaza Strip in 2005 after 38 years of occupation. But it controls Gaza's borders, air space and coastal waters, leaving the Palestinian territory dependent on the Jewish state for utilities and imports of humanitarian aid.

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