RAMALLAH, West Bank (Reuters) - The remains of 91 Palestinian militants whose attacks killed hundreds of Israelis over the past 35 years were returned to the West Bank and Gaza on Thursday in a gesture Israel said it hoped could help revive peace efforts.
Palestinian leaders, however, signaled no shift in their refusal to negotiate as long as Israel continues building settlements on land where they hope to establish a state.
The boxed remains of 80 militants were transferred to coffins draped in the Palestinian flag for a solemn ceremony at the official compound in Ramallah of Palestinian President Mahmoud Abbas.
Abbas prayed among the ranks of dignitaries, but said nothing, possibly to avoid provoking Israel by honoring the dead as "fallen martyrs", as they are referred to in Palestinian media.
It was sufficient that he was present and had ordered military honors for the reception, an official explained.
The dead included more than 20 suicide bombers who killed over 200 people in attacks in Israeli cities from 1995 to 2006, and who to many Israelis are "terrorists" and killers.
Unlike the release of hundreds of Palestinians from Israeli prisons last October, the transfer of the dead militants stirred little public reaction in Israel, where recovery of the bodies of soldiers from enemies -- sometimes in exchange for jailed Arab militants -- has long been seen as a national priority.
The handover came at a time of relative calm in Israeli-Palestinian relations. A mass hunger strike by Palestinian prisoners in Israeli jails was peacefully resolved in mid-May through some concessions by Israel, and sporadic clashes along the Gaza border have abated in recent weeks.
"It is our hope that this humanitarian gesture will serve both as a confidence-building measure and help get the peace process back on track," said Mark Regev, a spokesman for Israeli Prime Minister Benjamin Netanyahu.
In a speech on Tuesday, Netanyahu repeated his call on Abbas to "give peace a chance" by resuming unconditionally the direct negotiations that broke down in November 2010.
The Palestinians fear the spread of Israeli settlements is steadily shrinking the land they would have for a viable independent state and reject any more talking until the construction is halted.
Netanyahu's domestic political coup on May 8, bringing the opposition Kadima party into his camp to create the largest governing majority coalition in Israeli history, has fuelled speculation that a fresh peace initiative might be imminent.
German President Joachim Gauck, after talks with Abbas on Thursday, urged a resumption of negotiations. At their joint news conference, the Palestinian leader renewed his commitment to peace but gave no indication that he was considering a return to the negotiating table, unless settlement ceases.
The Palestinian militants had been buried, some for decades, in a desolate Israeli military cemetery for "enemy combatants" in the occupied West Bank, a place the Palestinians call "the cemetery of numbers" because the graves had no names.
The dead were given their names back on their return, and as soon as ceremonies ended families surged forward to claim the coffins, hoisting them onto the shoulders of pall bearers.
Seven men whose 1975 attack on Tel Aviv shook Israel to the core were singled out for special honors including a 21-gun salute. They were fighters of the Fatah movement, who landed by sea at night and seized the Savoy hotel to force Israel to release Palestinian prisoners.
They were killed in an Israeli commando raid, in which eight hostages and three soldiers also died. Now they are buried in a special military cemetery, each with a last photograph of the group perched on a Lebanese mountain-top before their mission.
In Gaza, Palestinians gathered at Israel's fortified Erez crossing to receive 11 bodies, some only partial remains. The enclave's Islamist rulers, Hamas, transferred them to the city in 12 white vehicles flying Palestinian flags.
"The message of the martyrs who blew themselves up in Tel Aviv, Haifa and other places is that freedom is coming," said Khaled Al-Batsh of the armed Islamic Jihad group. "Rights cannot be begged, rights must be extracted."
To Palestinians, the dead who came home on Thursday are honored as heroic martyrs of the cause, deprived until now of graves that their families "can visit, to place flowers and recite some Koran verses", as one woman put it.
Among those brought back to Gaza was Reem al-Reashi, a Hamas suicide bomber who blew herself up at an Israeli army checkpoint in 2004, killing four soldiers.
Additional reporting by Nidal al-Mughrabi in Gaza, Maayan Lubell in Jerusalem, Jihan Abdallah and Noah Browning in Ramallah. Writing by Douglas Hamilton, Editing by Diana Abdallah