Israel warned Thursday against a proposal to ease sanctions on Iran in return for the freezing of its nuclear program, saying it would be "a mistake of historic proportions."

"Israel understands that there are proposals on the table in Geneva today" which would "allow Iran to retain the capabilities to make nuclear weapons," Prime Minister Benjamin Netanyahu said at a Jerusalem conference.

Israeli security forces on Thursday shut down two east Jerusalem offices they said were a cover for activities of the Palestinian Islamist movement Hamas, which rules the Gaza Strip.

A statement from Israel's Shin Bet internal security service said its agents and police closed "two Jerusalem offices, from which the Hamas terror organisation had been conducting actions."

U.S. Secretary of State John Kerry said on Thursday he has made "significant progress" in marathon talks with Israeli and Palestinian leaders amid fears Israeli settlements could derail the peace process.

Kerry pledged that he "absolutely" believed a final agreement on all the most difficult issues could be reached but he did not rule out the possibility of first striking an interim deal.

President Michel Suleiman on Thursday called for an end to the paralysis of constitutional institutions and said the country's capabilities should be put in a single strategy to defend Lebanon.

During a ceremony at Baabda Palace to launch a plan to eradicate child labor, Suleiman said: “We want responsible constitutional institutions and leaders who consider the nation's interest as their priority.”

Palestinian officials demanded a global probe into the "killing" of Yasser Arafat on Thursday, a day after it emerged that Swiss forensic tests showed he probably died from polonium poisoning.

With the scientific analysis purportedly showing how the Palestinian leader had died mysteriously, a senior figure in the Palestine Liberation Organization called for an international inquiry to determine who was behind it.

The European Union said Thursday it deplored the latest Israeli decision to build new settler homes in east Jerusalem and the West Bank and that it should be reversed.

The move announced Sunday to build some 1,859 homes threatens the Israel-Palestinian peace process, EU foreign affairs head Catherine Ashton said.

Secretary of State John Kerry held talks with Jordan's king Thursday after reaffirming U.S. opposition to Israeli settlements, as the contentious issue threatens to derail the peace process.

The top U.S. diplomat met with King Abdullah II in Amman and was later to hold talks with Jordanian Foreign Minister Nasser Judeh.

The parliamentary telecommunications committee will hold an emergency meeting on Monday to tackle the recent spying stations installed by Israel along its border with Lebanon as caretaker Telecom Minister Nicolas Sehnaoui considered the matter “violation of the country's sovereignty.”

The head of the Committee, MP Hassan Fadlallah, said in comments published in As Safir newspaper on Thursday that the meeting will be held in presence of Sehnaoui and a specialized team in addition to the Foreign Ministry representative.

Israel urged world powers on Wednesday to reject what it said was an Iranian offer to partly cut back its nuclear program in return for an easing of Western sanctions.

"Israel in the last few hours has learned that a proposal will be brought before the P5+1 in Geneva in which Iran will cease all enrichment at 20 percent and slow down work on the heavy water reactor in Arak, and will receive in return the easing of sanctions," an official told Agence France Presse on condition of anonymity.

Speaker Nabih Berri revealed on Wednesday that Israel had set up a number of spying stations along its border with Lebanon, reported the National News Agency.

He said during his weekly meeting with MPs at his Ain el-Tineh residence: “The stations begin at al-Naqoura, pass through Khiyam, and end in Shebaa.”