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Fatah, Hamas Reach Agreement on Interim Unity Govt, Elections

Rival Palestinian groups Hamas and Fatah reached an "understanding" in Cairo on Wednesday to set up a transitional unity government and to hold elections, prompting a swift warning from Israel.

Israeli Prime Minister Benjamin Netanyahu demanded that Palestinian president Mahmoud Abbas, who heads Fatah, "choose between peace with Israel or peace with Hamas."

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Palestinian Factions Vow to Avenge Israel Strike

Militant groups in the Gaza Strip vowed again Sunday to avenge the killing of three of their own, saying Israel would be punished for the strike.

"The occupation's crimes will not go unpunished and it will bear all consequences," said a joint statement from the military wings of Hamas, Islamic Jihad and other armed Palestinian factions.

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Bomb Rips Through Jerusalem Bus, 20 Hurt

Twenty people were hurt, three of them seriously, when a bomb exploded next to a bus in Jerusalem, medics said, after Gazan militants threatened retaliation for a series of deadly Israel raids.

"The bomb was inside a bag which was left at the bus stop," Israel's Internal Security Minister Yitzhak Aharonovitch told reporters at the scene.

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U.S. Criticizes Israeli Settlement Construction Plan

The U.S. Embassy said Monday it was "deeply concerned" by Israel's plans to build hundreds of new homes in the West Bank following a deadly attack on a settler family, calling Israeli settlements "illegitimate" and an obstacle to peacemaking.

In a rare interview to the Israeli media, the Palestinian president reached out to the Israeli public, decrying the weekend attack in the settlement of Itamar as "despicable, immoral and inhuman." But he rejected the Israeli suggestion that his government was indirectly to blame.

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Mideast Quartet Talks Peace with Israel, Palestinians

Envoys of the Middle East Quartet were meeting with Israel's chief peace negotiator on Thursday, as the Jewish state faced growing pressure to break the logjam in talks with the Palestinians.

Talks with Israeli envoy Yitzhak Molcho were being hosted by the U.S. embassy, with Washington represented by David Hale, assistant to U.S. Middle East envoy George Mitchell, an embassy spokesman told Agence France Presse.

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Models Strut in Rare West Bank Fashion Show

Draped in sleek evening gowns and frothy wedding dresses, the models at the West Bank's first haute couture fashion show could have been walking at Paris Fashion Week.

But the rare presentation was instead staged in the West Bank city of Ramallah, the de facto capital of the Palestinian territories, during the city's first ever bridal fair.

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Britain to Upgrade Palestinian Diplomatic Status

Britain will upgrade the status of the Palestinian delegation to London to the level of a mission in line with a number of other EU countries, Foreign Secretary William Hague said on Monday.

"Given the extent of our aid to the Palestinian Authority and our work with them, we will join many other countries in upgrading the status of the Palestinian delegation to London to the level of a mission," he told parliament.

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Palestinians Stage Demo to Protest 'Despicable' Obama U.N. Veto

Around 3,000 Palestinians gathered in the West Bank on Sunday to protest against the U.S. veto that nixed a Security Council resolution on Israeli settlements.

The crowd massed in Ramallah's Manara Square, a central roundabout in the West Bank city, waving banners and shouting slogans against the American administration.

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Greece Upgrades Palestinian Representation Status

Greece became the sixth European country to upgrade the diplomatic status of the Palestinian Authority Tuesday, accepting formal ambassador credentials from the Palestinian envoy to Athens.

"I am very proud to be the first Palestinian ambassador to present my credentials to his excellency the president of the Greek republic," the envoy Samir Abu Ghazaleh said, after handing his letters of credence to Greek President Carolos Papoulias.

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In Jerusalem, EU's Ashton Says Peace Possible by Sept

EU foreign policy chief Catherine Ashton on Tuesday said the international community still sought to achieve a peace deal and a Palestinian state by September, despite the region's political turmoil.

Despite the impasse in Israeli-Palestinian peace talks and the resignation of the Palestinian cabinet as well as Saab Erakat, their chief negotiator, Ashton said the goal was still achievable.

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