Israel and the Palestinians have started their formal peace talks, although the first such meeting in seven years may be overshadowed by Israel's announcement of new settlements in East Jerusalem and heavy fighting in Gaza.

The talks, designed to capitalise on the regional summit in Annapolis, America, two weeks ago, come a day after Israel sent tanks into Gaza to hunt militants, triggering intense battles that left at least seven Palestinian militants dead. Some Palestinian officials had called for a boycott of the talks in protest at Israel's decision to build more than 300 new homes in Ha Homa. Israel pledged to freeze settlement building at Annapolis, and the development has caused uproar.

In Ankara, Abdullah Gul, the Turkish President, said that the plans had “shocked the whole world ... the Israeli leadership must correct this.” The Palestinians fear that the new housing will cut East Jerusalem off from the West Bank and complicate the new talks.

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