At the very moment President Obama was denouncing Palestinian violence, the live al-Jazeera transmission in Gaza City's al Waha café was rendered briefly inaudible by heavy static – assumed by all present to be caused, as it usually is, by overhead Israeli surveillance drones.

This surreal moment apart, the speech was mostly well received. The café was less than half full and one or two patrons were not even watching. But most who were, to judge by their subsequent reactions, did so with increasing respect and some genuine surprise. "It was very good," said Mahmoud Jamal, 23, a recent engineering graduate from Gaza's Islamic University. "He spoke about democracy and religion with an excellent vision. This was a speech which we are not used to hearing from an American president. Most important is to implement what he said."

Mr Jamal was especially impressed by the President's belief in women's "democratic rights" to wear the hijab if they chose and even more so by his emphasis on the need for oil-rich Arab states to educate and mobilise, as Mr Jamal put it "the youngsters in their societies who have the energy to do something." "He is trying to change the world track," he added. "What was good about the speech was that he talked about things, I am sorry to say this, that Arab leaders do not talk about."

Mohammed Ghaneim, 19, a student, was much less impressed. "This is not going to change anything," he said. "It was all words." But this was not the majority view in the café. "For me it was a very important speech," said Munir Dweik, 47, a taxi driver. "I hope this will lead the world to become serious about reconciliation in every place, including between Israelis and Palestinians."

Adeeb Zarouk, 47, a satellite dish repairman, said the President was trying, post-Bush, "to improve the image of America in the Arab world, in American interests". But he was encouraged overall by the passages on the Israel Palestinian conflict, saying: "It is a good start. The question is whether the Zionists in America will allow him to move on this or not." Indeed, Mr Zarouk was sufficiently impressed to worry aloud "that someone might attempt to kill him like they killed Kennedy".

As the Fatah-led Palestinian Authority also described the speech as a "good start", Fawzi Barhoum, a Hamas spokesman said: "There is a change between the speech of President Obama and previous speeches made by George Bush. But today's remarks at Cairo University were based on soft diplomacy to brighten the image of the United States."

Jewish settlers' leaders reacted angrily to the speech which repeated strong US calls for a settlement freeze. The Yesha council, the settlers' umbrella body, said: "Hussein Obama gave priority to Arab lies which have always been told with determination and daring, at the expense of the Jewish truth, which has been said in a weak and unconfident voice."

But an official Israeli statement, omitting to mention differences with the US over settlement policy, said it shared President Obama's "hope that the American effort heralds the opening of a new era that will bring an end to the conflict and to general Arab recognition of Israel as the nation of the Jewish people that lives in security and peace in the Middle East."