3:30 PM
SHARM EL-SHEIKH - Leaders trying to halt a welter of Israeli-Palestinian violence kept up marathon talks late into the night, but no agreement emerged.
"We are in the midst of very delicate discussions," Egyptian spokesman Nabil Osman said.
"They are still continuing, which means there are points of difference that must be ironed out."
At least 102 people, most of them Arabs, have been killed in the violence that has rocked the West Bank, Gaza Strip and parts of Israel.
Two Palestinians were shot dead on Monday.
A European diplomat said the two sides had made some progress on other issues, but remained at odds on a Palestinian demand for an international inquiry into what caused the unrest.
Israel says it will only accept a U.S.-led fact-finding mission.
President Clinton and Egypt's President Hosni Mubarak, hosting a crisis summit that opened on Monday in the Red Sea resort of Sharm el-Sheikh, held a series of separate meetings with Israeli Prime Minister Ehud Barak and Palestinian President Yasser Arafat in a bid to clinch a deal.
Palestinian officials said Israel had rejected their demands for an unconditional withdrawal of Israeli troops to where they were before the protests flared 20 days ago and for the lifting of a military closure of the West Bank and Gaza Strip.
"Without these two conditions there won't be agreement and we cannot sit down and draft an understanding," Palestinian Information Minister Yasser Abed Rabbo told Reuters.
He said the Israelis wanted to link the troop withdrawal to their demands that Arafat disarm members of his Fatah faction and re-arrest Hamas and Islamic Jihad activists who were released by Palestinian police in the last two weeks.
"This is unacceptable. We will continue the security meetings tonight," Abed Rabbo said.
Barak and Arafat were not known to have met for any face-to-face talks and sat through a lunch given by Mubarak for summit participants on Monday without speaking to each other.
Their frostiness showed the depth of scars inflicted by the unrest that erupted on September 28 after Israeli hawk Ariel Sharon visited a Jerusalem shrine holy to Muslims and Jews.
Israeli government spokesman Nachman Shai said Barak was close to forming a "national unity government" with Sharon, accused by Arabs of igniting the violence. Sharon, a critic of Barak's peace deals with Palestinians, has not yet agreed.
Clinton and Mubarak held more than an hour of talks with Arafat after midnight following after-dinner discussions that involved Jordan's King Abdullah, U.N. Secretary-General Kofi Annan and European Union foreign policy supremo Javier Solana.
U.S. officials said Clinton later met Barak for their fourth session since the Sharm el-Sheikh talks began. The American president has met Arafat three times.
"The Americans have begun to understand the need for an unconditional (Israeli) withdrawal and an end to hostilities," Palestinian negotiator Ahmed Korei, or Abu Ala, said.
Clinton had originally planned to leave the summit late on Monday, but stayed on in an extra effort to mediate an end to the spasm of violence that has threatened to bury peacemaking.
White House spokesman Jake Siewert said Clinton could not stay much beyond Tuesday afternoon if he was to attend Wednesday's memorial service in Norfolk, Virginia, for 17 American sailors killed in last week's suicide bombing of a U.S. destroyer in the Yemeni port of Aden.
"I am not going to... try to characterize where we are. But we obviously think it's worth continuing to work," he said after Clinton's overnight talks with Arafat.
"The president has put in a pretty long day at this point, but he's still at it."
He described most of Clinton's meetings as "straightforward and businesslike" and said a sharp exchange between Israeli and Palestinian foreign ministers was "the exception, not the rule."
"I am not going to say we are optimistic or pessimistic. We are just working," Siewert said.
"We are going to keep at it. I wouldn't rule out any further meetings (tonight). Arafat indicated that he'd be willing to come back," he said.
Although Clinton opened the summit by asking the two sides to stop blaming each other for the clashes, anger spilled over when foreign ministers tried to draft a joint statement.
"You murderers!" Palestinian negotiator Saeb Erekat yelled at Secretary of State Madeleine Albright, Israeli acting Foreign Minister Shlomo Ben-Ami and U.N. Middle East envoy Terje Roed-Larsen at the drafting committee's third meeting.
"You have taken the whole Palestinian people hostage. This is unacceptable!" Palestinian officials quoted Erekat as saying.
P.J Crowley, spokesman for the U.S. National Security Council, said Albright denied that Erekat had made such remarks.
Clinton said the summit had three aims: to stem the violence, agree on an investigation into its causes and eventually to find a way back to peace negotiations.
He recalled the progress achieved in the past seven years of Israeli-Palestinian peace talks, saying: "We shouldn't give it all up for what has happened in the last few weeks."
A Washington-based analyst said the Palestinians could only achieve their dream of an independent state by negotiation.
"The Palestinians are not going to riot their way to statehood," said Jon Alterman, Middle East expert at the U.S. Institute for Peace.
He said it would be easier for the leaders to strike a deal than to revive trust between their peoples after the violence.
"There are people who have been working for a decade who really feel completely betrayed about what's happened on both sides and that ultimately is a much, much more difficult thing to rebuild," Alterman said.
- REUTERS
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