Annan 'close to deal' on key Palestinian demand

As mediators grapple with ending cycle of violence, one victim is buried and another lies 'clinically dead' in a Gaza hospital bed

Italy emerged last night as the most likely site for a Middle East summit, as mediators led by the United Nations Secretary General, Kofi Annan, were scrambling to nail down an interim deal that could end a fortnight of bloodshed between Israelis and Palestinians.

Italy emerged last night as the most likely site for a Middle East summit, as mediators led by the United Nations Secretary General, Kofi Annan, were scrambling to nail down an interim deal that could end a fortnight of bloodshed between Israelis and Palestinians.

In Cairo, the chief European foreign policy representative, Javier Solana, spoke of a possible breakthrough "within hours" on the shape of a commission of inquiry into the violence which has claimed at least 92 lives, almost all of them Palestinian and Israeli Arabs.

Disagreement on the make-up of the commission has been the biggest stumbling block to a truce, and was the reason for the failure of last week's summit in Paris between Ehud Barak, the Israeli Prime Minister, and the Palestinian President, Yasser Arafat.

Earlier, after Mr Annan held separate meetings with Mr Barak and Mr Arafat, a UN spokesman said it was hoped something could be agreed by the end of the day. This would consist of a formula allowing both sides to appeal for calm, "and once calm is restored to try to resume the peace process".

Mr Annan and Mr Solana were just two of a small army of foreign ministers and special envoys crisscrossing the region - including Robin Cook, the Foreign Secretary, accompanied by Lord Levy, Tony Blair's personal envoy for Middle Eastern affairs, and the Russian Foreign Minister Igor Ivanov.

All were acutely conscious that time was desperately short, and without a concrete step to reverse the escalation of violence, the region could slide into generalised chaos. Even as Mr Cook appealed for both sides to "step back from the brink", there were new flare-ups on the ground, breaking a 24-hour lull in the fighting. On the West Bank, a 17-year-old Palestinian was shot dead by Israeli troops, while the two sides exchanged machine-gun fire as Jewish settlers left a funeral.

But the prospects for a full-scale summit remained confused. In Washington, President Bill Clinton seemed to rule out an immediate meeting, indicating that Arab countries wished first to hold their own summit, set for 21 October in Cairo.

At the same time President Hosni Mubarak of Egypt said he would not convene a summit until Israel met five conditions. These included a complete pull-out of its troops from Palestinian territories, a ban on "inflammatory" gestures such as the visit by Ariel Sharon, the hardline Likud party leader, to Islamic shrines, and agreement to an international inquiry.

Last night, diplomats were hopeful a formula for the investigation could be found. Once a more durable-looking ceasefire is in place, the two leaders could meet face-to-face.

Rome looked the frontrunner for the site, as Giuliano Amato, the Prime Minister, confirmed that Italy had offered the venue, "if this would be seen as useful". He said that ideally the talks would be held under United States auspices, but Italy would do all it could to bring Palestinians and Israelis together.

Mr Solana said last night: "We have a window of opportunity which is not very wide." The key will be to reconcile Israel's insistence that only its own, Palestinian and US officials should take part in the inquiry, and Mr Arafat's demand that the panel should be widened to include European representatives, which he believes would be more sympathetic to the Palestinian cause.