Palestinian President, Mahmoud Abbas, has effectively declared an end to the four year uprising in the territories, calling an immediate ceasefire.

The leaders told the meeting, which follows a new US peace push, that it was time to end the cycle of violence which has claimed some 4,700 lives.

“We have agreed with the prime minister to cease all acts of violence against Israelis and against Palestinians wherever they are,” Mr Abbas declared at the summit in Sharm el-Sheikh on the palm-fringed shores of the Red Sea.

“The calm that is currently prevailing in our territories signals the start of a new era, the start of a hopeful peace,” he added.

Mr Sharon, in Egypt for the first time as prime minister, said he was ordering a complete cessation to military activities against the Palestinians.

“We have an opportunity to turn our back on the bloody path imposed on us over the last four years,” he said. But he cautioned that it was a “fragile opportunity” for peace, saying there were still “extremists” waiting to derail the process.

The Islamist militant movement Hamas, responsible for the majority of attacks during the intifada, dampened some of the optimism by declaring that it was not bound by the ceasefire announcement.

Mr Abbas’s declaration “expresses only the position of the Palestinian Authority. It does not express the position of the Palestinian movements,” said Hamas spokesman Mushir al-Masri.

The meeting between the two leaders was the first top-level summit in more than four years

New US Secretary of State Condoleezza Rice, in Paris shortly after her trip to the Middle East, said “Success is not assured, but America is resolute. This is the best chance for peace we are likely to see for years to come .. and we are acting to help Israeli and Palestinians seize this chance.” .

Mr Sharon’s spokesman Raanan Gissin revealed the premier had even invited Abbas to his farm in the Negev desert although there was no confirmation the invitation had been accepted.

The two men were pictured shaking hands amid a generally jovial atmosphere at a summit hosted by Egyptian President Hosni Mubarak and also attended by Jordan’s King Abdullah II.

However the Middle East peace process is littered with high-profile summits which have promised much but failed to deliver an end to the bloodshed.

And despite the optimism generated by their meeting, Mr Sharon and Mr Abbas steered clear of some of the most contentious issues, such as the final borders of any future Palestinian state and the status of Palestinian refugees.

But another sign that a new era in the Middle East is emerging came as Egypt’s Foreign Minister Ahmed Abul Gheit announced that Jordan and Egypt would be returning their ambassadors to the Jewish state in a couple of weeks.

Egypt withdrew its ambassador from Tel Aviv shortly after the outbreak of the uprising in September 2000 while Jordan did not replace a departing ambassador in protest at Israel’s use of “excessive force” against Palestinians.

Mr Sharon also confirmed that Israel would soon release hundreds of Palestinian prisoners. Negotiators have already reached a tentative agreement for the release of some 900 detainees.

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