The Israeli and Palestinian leaders are likely to hold their first meeting in the coming weeks, both sides indicated today, in what would be an important step toward a formal resumption of peace talks and a signal achievement for President Barack Obama.

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The announcements came as Israeli Prime Minister Benjamin Netanyahu held four hours of talks with Obama's Mideast envoy, George Mitchell, in London today. Mitchell has been pressing Israel to halt construction of West Bank settlements as a confidence-building gesture toward the Palestinians.

In a joint statement released by the State Department in Washington later today, the two men said they had "made good progress" in talks, but did not elaborate.

"They agreed on the importance of restarting meaningful negotiations between Israelis and Palestinians and working toward a comprehensive peace, and that all sides need to take concrete steps toward peace," the statement said.

Before the meeting, Netanyahu said he was making headway in defusing the unusually public disagreement with the Americans. Netanyahu has said he wants a compromise that would allow Israel to continue with some settlement construction while at the same time restarting peace talks with the Palestinians.

"We are making headway. My government has taken steps in both words and deeds to move forward," he said. In the past week, both Israel and the US have been signaling that an agreement could be within reach.

It is unclear what sort of compromise would be acceptable to the Americans or to the Palestinians. Netanyahu and Mitchell are to meet in the United States next week.

Later today, Netanyahu traveled to Berlin where he met President Horst Koehler.

Obama, who has made Mideast diplomacy a top priority of his administration, has said he opposes all settlement construction. The Palestinian president, Mahmoud Abbas, has staunchly refused to reopen peace talks until Netanyahu halts all settlement activity. Years of on-again off-again negotiations broke down shortly before Netanyahu took office in March.

In a sign that Abbas was easing his position, Palestinian officials said their leader would likely meet Netanyahu at the UN General Assembly next month in New York. The officials said American diplomats are eager to see the sides resume contact.

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They said that, while Abbas is prepared to talk to Netanyahu, he would not reopen negotiations until Israel halts its settlement activities. The officials spoke on condition of anonymity because nothing has been formally scheduled.

The Palestinians, and the international community, consider settlements to be obstacles to peace. Some 300,000 Israelis now live in West Bank settlements, in addition to 180,000 Israelis living in Jewish neighborhoods in east Jerusalem. The Palestinians claim both areas, captured by Israel in the 1967 Mideast war, as parts of a future independent state.

In recent days, Netanyahu has said he sees the spotlight on settlements as unfair and insisted the Mideast conflict is rooted in a deep Arab enmity toward Israel that predates them. Israeli officials say Netanyahu expects the Arab world to make goodwill gestures to Israel in exchange for a settlement freeze.

The subject of settlements was also sure to be raised at his meeting with German Chancellor Angela Merkel tomorrow.

German government spokesman Klaus Vater said that Berlin backs a two-state solution and, pending that, advocates that "no further settlements be built in the occupied areas."

A poll released today in Israel showed freezing settlements would be an unpopular move. Almost two-thirds of those questioned told pollsters they opposed a freeze, even in return for moves by Arab countries toward normalization of ties with Israel. Thirty-nine percent said they would support a freeze in return for Arab gestures.

Conducted by the Maagar Mohot polling company, the survey questioned 506 Jewish Israelis and had a margin of error of 4.5 percentage points.

The issue has come to overshadow Israel's ties with the U.S and much of the international community since Netanyahu took power with a hardline government and Obama indicated that years of reluctant US tolerance for settlement construction had ended.

Netanyahu's aides have been dropping optimistic hints in recent days, saying a compromise with the US is growing closer. Mark Regev, Netanyahu's spokesman, told reporters ahead of the Mitchell meeting, that the Israeli government hopes peace talks can be resumed "within several weeks."

Israeli officials, like the Palestinians, have floated the idea of a meeting between Netanyahu and Abbas at the UN General Assembly.