Abbas, Olmert meeting postponed - Israel

JERUSALEM, June 6 (Reuters) A summit scheduled for Thursday between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas has been postponed at the Palestinians' request, Olmert's office said today.

Olmert and Abbas had been expected to hold talks in the West Bank city of Jericho focusing on aspects of Palestnian statehood.

But both sides have been haggling over Israeli confidence-building steps and Abbas's proposal, rebuffed by Israel and the Islamic militant group Hamas, for a truce in the Gaza Strip and occupied West Bank.

''The meeting tomorrow between Prime Minister Olmert and President Abbas has been postponed as per the Palestinians' request,'' Olmert's office said in a statement.

An official in Olmert's bureau said no new date had been set for the summit.

Abbas aide Nabil Abu Rdainah said: ''There is a need to reach an agreement on some issues before convening the meeting.'' Olmert and Abbas last met on April 15 as part of a US-initiated series of talks envisaging a meeting every two weeks.

But internal Palestinian violence, fighting between Israel and militants and Olmert's political troubles at home after criticism from an inquiry into last year's inconclusive Lebanon war have delayed the meetings.

In preparation for the summit, Olmert has been considering returning at least some of the tax revenues Israel has been withholding from the Palestinian Authority since Hamas won a parliamentary election in January 2006, Israeli officials said.

Palestinian officials estimate that Israel is withholding some 700 million dollars in Palestinian tax revenues.

But Israeli officials estimate that only 300 million dollars to 400 million dollars of that could be transferred to the Palestinians because the rest of the money has been frozen by court orders.

Olmert, citing fears that funds could reach Hamas, has long resisted European calls to transfer Palestinian tax revenues to stave off collapse of the Palestinian Authority and bolster Abbas.

Abbas's Fatah faction has been locked in a power struggle with Hamas but formed a unity government with the group in March.

REUTERS KN ND1642