Barak and Mubarak discuss Mideast peace efforts

Israeli Defence Minister Ehud Barak discussed on Sunday US-backed efforts to revive Middle East peace with Egyptian President Hosni Mubarak during a visit to Cairo.

The two discussed "efforts to revive the peace process in the Middle East, the situation in the Palestinian territories and efforts by Egypt to kickstart serious negotiations between the Palestinian and Israeli sides," the official MENA news agency reported.

Barak was to leave Cairo after further meetings with intelligence chief Omar Suleiman, Egypt's chief mediator between Israel and the Islamist Hamas, and with Defence Minister Hussein Tantawi, an Israeli official told AFP.

Egypt has been mediating between rival Palestinian factions Fatah and Hamas as well as between Hamas and Israel on a possible deal to end the Gaza blockade and free Gilad Shalit, an Israeli soldier captured by Gaza militants including Hamas almost three years ago.

The pan-Arab daily Asharq Al-Awsat on Saturday quoted Israeli sources as saying that "a new development has led to tangible progress... the most important issue to be discussed is the prisoner exchange."

"Hamas realises that (Benjamin) Netanyahu's government will not accept anything that (his predecessor Ehud) Olmert's government did not accept," the paper quoted Israeli political sources as saying.

"There is a new list of Palestinian prisoners that Hamas wants released."

"Netanyahu's government also realises that it must stop the blockade on Gaza and stop using the blockade as a way to bring down Hamas."

Barak's visit follows a landmark speech delivered by US President Barack Obama in Cairo on June 4 in which he outlined his strategy for re-launching the faltering peace talks.

The talks also come a week after the hawkish Israeli premier Netanyahu endorsed for the first time the creation of a Palestinian state, albeit demilitarised, at the end of the peace talks.

Barak, who heads the centre-left Labour party, hailed Netanyahu's speech as a "major step forward in the right direction."

Mubarak meanwhile said a peace deal was "within reach" but that Israel must stop settlement activity in the occupied West Bank.

Egypt and Israel signed a historic peace treaty in 1979, the first such agreement ever concluded between Israel and an Arab state.