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The Israeli and Palestinian leaders have expressed their optimism over the chances for peace, ahead of a summit of EU and Mediterranean rim nations.
Israeli PM Ehud Olmert said they had never been so close to reaching an agreement with the Palestinians as now. Palestinian leader Mahmoud Abbas said both were serious and wanted peace.
Leaders from 43 nations are meeting in Paris to launch a regional union, tackling issues including regional unrest, immigration and pollution.
Summit host, President Nicolas Sarkozy, said the aim was to see that the region was a place where people could love each other instead of making war.
Ahead of the summit, Mr Sarkozy addressed the media alongside Mr Abbas and Mr Olmert.
"How can we achieve peace in this part of the world unless we build confidence, unless we extend the hand of peace and take the initiative?" he said.
Mr Olmert said they had never been so close to an agreement with the Palestinians as they were today, but gave no further details.
Israeli government spokesman Mark Regev was quoted by AP news agency as saying that the prime minister had "agreed in principle" to release an unspecified number of Palestinian prisoners.
Israel's Haaretz newspaper said this would be unrelated to the prisoner exchange deals the government is conducting with Hezbollah and Hamas.
There are thousands of Palestinian prisoners in Israeli jails.
At the news conference, Mr Olmert said that he would like direct talks with Syria, but warned they must not hinder talks with the Palestinians.
Mr Olmert is under pressure at home, where he is facing serious corruption allegations. There have been calls for the prime minister, who denies any wrongdoing, to resign.
BBC Europe editor Mark Mardell, in Paris, said the meeting had been very optimistic.
Progress has already been made in other areas. Mr Sarkozy announced on Saturday that Syria and Lebanon had agreed to set up embassies in each other's capitals for the first time.
Relations between the two have been strained since Lebanon's former PM Rafik Hariri was assassinated in 2005 - an attack which Lebanon claims Syria was involved in.
The French president also asked Syria's leader Bashar Assad to use his ties with Iran to help resolve the international stand-off over Tehran's nuclear ambitions.
Mr Sarkozy has long spearheaded the idea of a Union for the Mediterranean.
He recently claimed the grouping could transform the Mediterranean region into an area of peace and prosperity.
Critics have dismissed the new union as lacking substance, and diplomats say there are continuing disagreements over key issues such as how to address the Middle East peace process and a possible role for the Arab League.
The only European or Mediterranean rim leader boycotting the Paris meeting is Libyan President Muammar Gaddafi, who has described the union as a new form of colonialism.