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Israeli aircraft target Gaza sites

Militants have launched mortar shells into Israel and Israeli jets bombed targets in Gaza, just as Israeli and Palestinian leaders held peace talks in Jerusalem with US Secretary of State Hillary Clinton.

Gaza militants opposed to peace with Israel have threatened to derail the fledgling negotiations, and the Israeli military said eight mortars and one rocket hit Israel by mid-afternoon on Wednesday - the highest daily total since March 2009. There were no injuries.

Israeli planes responded by bombing a smuggling tunnel along the Gaza-Egypt border, the military said. Hamas officials said one person was killed and four wounded.

In Jerusalem, little more than an hour's drive from Gaza, Mrs Clinton said Israeli and Palestinian leaders were "getting down to business" on the major issues dividing them, though there was no sign they were any closer to resolving a looming crisis over Israeli West Bank settlements.

The American Secretary of State was in Jerusalem for a second day of talks aimed in part at ending the impasse, a day after meeting Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas at a summit hosted by Egypt.

"They are getting down to business and they have begun to grapple with the core issues that can only be resolved through face-to-face negotiations," Mrs Clinton said. "I believe they are serious about reaching an agreement that results in two states living side by side in peace and security."

Mr Abbas has threatened to walk out of the talks if Israel resumes construction in the settlements after a 10-month slowdown expires at the end of the month. Mrs Clinton and US President Barack Obama have called on Mr Netanyahu to extend the slowdown.

Mr Netanyahu has signalled he is looking for a compromise. Earlier this week, he said the current curbs will not remain in place after the end of this month, though he will continue to restrict building activity to some extent.

The Palestinians oppose the settlements because they eat up land they want for their future state. Some 300,000 Israelis live scattered among the West Bank's 2.5 million Palestinians. An additional 200,000 Israelis live in east Jerusalem, the section of the holy city the Palestinians claim as their capital.

Mr Obama has made his pursuit of a Middle East settlement a centrepiece of his foreign policy. After months of US shuttle diplomacy, he summoned the Israeli and Palestinian leaders to Washington early this month to formally launch the first direct negotiations since talks collapsed in 2008 following Israel's military offensive in Gaza.

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