Israeli and Palestinian negotiators have met in Jerusalem for a new round of direct peace talks after a three-year break, as pessimism ran deep on both sides.
There was no confirmation from Israeli or Palestinian officials who were maintaining a news blackout on details of the encounter late on Wednesday.
Palestinian officials had earlier told AFP that negotiators would meet in the prestigious King David hotel, but reports in Haaretz newspaper and on Israeli public radio did not name the location.
The meeting has been overshadowed by Israeli plans to build thousands of new homes for Jewish settlers on land which the Palestinians claim for their promised future state.
Israel freed 26 Palestinian prisoners on Wednesday but also pledged to keep up the pace of settlement building on occupied land.
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Those released from jail were the first batch of 104 prisoners, most of whom had been serving life terms for killing Israelis, who are to be freed in stages depending on progress in the talks.
But as Palestinians celebrated the releases, Israeli Housing Minister Uri Ariel cast a pall over proceedings.
"We will build thousands of homes in the coming year in Judaea and Samaria," Ariel told public radio, using the biblical Hebrew term for the West Bank.
"No one dictates where we can build ... This is just the first course."
His remarks came as the negotiating teams readied for the talks, the result of efforts by US Secretary of State John Kerry, who convened an initial meeting between the sides in Washington on July 30.
The last round of direct peace talks broke down just weeks after they were launched in September 2010 in a bitter row over settlements.
