Palestinian unity government talks on hold

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JERUSALEM (CNN) -- Palestinian President Mahmoud Abbas has suspended talks on a unity government with Hamas until after he returns from a United Nations meeting in New York, according to Palestinian negotiator Saeb Erekat.

The Palestinian president leaves Sunday to attend the U.N. meeting.

Erekat said Abbas was also upset by Hamas statements that it would not honor previously signed agreements with Israel.

Hamas, which won parliamentary elections in January, refuses to recognize Israel's right to exist.

It has been designated as a terrorist organization by the United States and European Union, which cut off international aid to the Palestinian government after Hamas took control. The unity government is seen as a bid to restore the money, which is the government's main source of funding.

Earlier this week, U.S. Secretary of State Condoleezza Rice and Israeli Foreign Minister Tzipi Livni both indicated that the international community was unlikely to accept a Palestinian unity government unless it renounced terrorism and accepted Israeli's right to exist.

Progress seen in kidnapped soldier case

Two Israeli politicians on Sunday hinted that there may be some progress in the case of kidnapped Israeli soldier Cpl. Gilad Shalit.

Shalit, 19, was kidnapped June 25. Hamas and other Palestinian militant groups took responsibility for his abduction from an Israeli border post near Gaza.

"I don't want to be specific about any part of it, but we believe there is some kind of progress in the chances to release him," Cabinet minister Me'ir Sheetrit said as he entered a Cabinet meeting in Jerusalem. "I hope it will come true soon."

Vice Premier Shimon Peres also commented.

"I think it will be complicated but finally I am sure he would be released," he said.

A Qassam rocket fired from Gaza on Sunday hit the Israeli city of Sderot, leaving one person with minor injuries, the Israel Defense Forces said.

Israel to examine Israel-Hezbollah war

Meanwhile, there's no word on the fate of two other kidnapped Israeli soldiers, seized by Hezbollah fighters in a cross-border raid July 12. The incident sparked a 34-day war between Israel and Hezbollah that ravaged Lebanon.

Israel's government on Sunday approved the creation of a committee to examine the political leadership and the security establishment regarding that conflict, the Israeli prime minister's office said.

The committee will be headed by retired Judge Eliyahu Winograd.

More than 1,069 people were killed in Lebanon and more than 4,055 wounded in the 34 days of fighting.

In Israel, 41 civilians and 118 soldiers were killed and more than 1,000 people were wounded.

A United Nations-brokered peace deal stopped the fighting and an international peacekeeping force is moving into southern Lebanon to enforce the cease-fire.

CNN's Ari Bell contributed to this report.

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