Cairo  - Israel's new government will continue negotiations with the Palestinian government and believes that reaching a peace agreement before the end the year is possible, Israeli President Shimon Peres said on Thursday.

"We hope to see an independent Palestinian state to live side by side with Israel in peace and security," said Peres in a press conference during an Israeli-Egyptian summit in the Egyptian Red Sea city of Sharm el-Sheikh.

Peres said the chances of reaching a peace agreement with the Palestinian government were high, without giving specifics.

Jerusalem  - A Palestinian stabbed to death an elderly Israeli passerby Thursday in the Jewish settlement of Gilo, south of Jerusalem, Israel Radio reported.

The Palestinian was stopped by two police officers and asked to identify himself, but he drew a knife and stabbed one of the officers.

The officer then shot the stabber, but he escaped and while running away fatally stabbed a second Israeli, a civilian in his 80s, whom he ran into, a witness who chased after the attacker and overpowered him said.

Ramallah - Palestinian President Mahmoud Abbas has sacked his chief of intelligence, Tawfiq Tirawi, officials at his office confirmed Wednesday.

Abbas issued a presidential decree, appointing Tirawi, 61, a security advisor to the president with the rank of minister, said the officials, who spoke on condition of anonymity because they are not authorized to speak to the media.

Tirawi will also continue to serve as director of the Jericho- based security academy he helped set up with European assistance two years ago

Tel Aviv - Pales

Ramallah - The world financial crisis is not expected to leave much of an impact on the emerging Palestinian economy, officials, business executives and economists agree.

They said during a luncheon to discuss the world economic crisis that due to the small size of the emerging Palestinian economy, the world financial crisis is not expected to leave any permanent or even short term scar on it.

Gaza  - The radical Palestinian Hamas movement said Saturday it will freeze talks on freeing a captive Israeli soldier until Egypt, which is mediating the prisoner swap with Israel, releases a Hamas militant it is holding.

"We put the case of Gilad Shalit in the refrigerator and it will remain frozen until Ayman Nofal is released from the Egyptian jail," said Yousef Farhat, a senior Hamas official in the Gaza Strip.