Olmert says understandings reached in peace talks

JERUSALEM (Reuters) - Israeli Prime Minister Ehud Olmert said on Tuesday he and Palestinian President Mahmoud Abbas had reached "understandings and points of agreement" on some key issues in U.S-backed peace talks.

Olmert gave no details. Faced with a police bribery investigation that could force him from office, Olmert is keen to show progress in the talks during this week's visit by U.S. President George W. Bush.

His assertion that some agreements have been reached ran counter to recent statements by top Palestinian officials.

"Our talks with the Palestinian Authority are serious and significant," Olmert said in a speech to visiting world leaders on the eve of Bush's arrival.

"There has been significant progress, and understandings and points of agreement have been reached in important matters, but not on all the issues," Olmert said.

Olmert did not elaborate on the points of agreement but said: "The biggest and most important challenge before the state of Israel, which will determine its future, is the challenge of determining permanent borders."

Israeli officials said last week that progress was being made on defining the borders of a future Palestinian state but not on the thornier issues of Jerusalem or Palestinian refugees.

Palestinian negotiators have described recent talks between Olmert and Abbas as serious but they said no agreements have been reached on any of the core issues.

"I do believe we can get a state defined by the end of my presidency," Bush told Israel's Channel 10 ahead of his arrival on Wednesday to mark the country's 60th anniversary.

"A state won't exist until certain obligations are met by everybody," he said. Defining what that state would look like was "very important", he added.

During his visit in January, Bush said he believed Israel would sign a peace treaty with the Palestinians in 2008.

The negotiations, launched in November with the goal of reaching some sort of statehood agreement before Bush leaves office in January, have been marred by disputes over Israel's settlement expansion and campaign against militants in the Hamas-controlled Gaza Strip.

Olmert admitted last week he took cash from an American businessman at the centre of the police investigation, but he has denied any wrongdoing. Olmert said he would resign if indicted.

Progress in the peace negotiations could influence Israel's attorney general in deciding whether to bring charges that could unseat Olmert and likely derail the talks.

Abbas's authority has been limited to the occupied West Bank since Hamas Islamists seized the Gaza Strip last June.

(Editing by Robert Woodward)