Egyptian President Hosni Mubarak held talks on Thursday with Jordan's King Abdullah and was due to meet the Palestinian president to coordinate positions ahead of a U.S.-sponsored peace conference.

Egypt, a key U.S. ally in the Middle East and one of only two Arab states to have signed a peace treaty with Israel, has offered broad support for next week's meeting in Annapolis, Maryland on the creation of a Palestinian state, despite initial reservations about preparations.

We are working to provide support for a process that we hope this time is serious, an Egyptian diplomat said, adding that Mubarak's talks in the Red Sea resort of Sharm el-Sheikh was aimed at consultation and coordination.

The United States has invited about 40 countries, including Saudi Arabia and Syria which have no relations with the Jewish state, to the meeting it hopes will launch negotiations to end the six-decade Israeli-Palestinian conflict.

It was unclear how far the conference will go in tackling the core issues -- borders, security, settlements, the status of Jerusalem and the fate of Palestinian refugees -- that have defeated previous efforts to end the conflict.

If the summit launches serious sustained negotiations on final status issues with a follow-up mechanism that is feasible, I think it will be a great step forward, the Egyptian diplomat said.

Israeli and Palestinian negotiators have been struggling to hammer out a joint document before the conference that would address in general terms core issues.

Yasser Abed Rabbo, an aide to Palestinian President Mahmoud Abbas, said on Voice of Palestine radio that a document would be ready ahead of the meeting and that a timeline for concluding negotiations within a year would be announced at the conference.

Israeli officials said they also expected a deal before the gathering but cautioned that differences remained. Miri Eisen, a spokeswoman for Israeli Prime Minister Ehud Olmert, said: Both sides are committed to trying.

WILL SAUDI ARABIA ATTEND?

There was still no final word on whether Saudi Arabia or Syria would attend the conference, although Saudi Arabia has not ruled out the possibility of taking part, according to comments by Crown Prince Sultan carried on state television.

Arab and Western diplomats say that Riyadh may decide at the last moment to send its foreign minister, but is more likely to send low-level representatives.

Saudi Arabia's participation could bolster Abbas's ability to reach an agreement and help Olmert sell it to Israelis by holding out the prospect of a wider peace with the Arab world.

The final word on who will attend may emerge after Arab foreign ministers meet in Cairo on Friday to take a common position on the conference. But Egypt, whose foreign minister has confirmed he will attend the Annapolis conference, would not be pressing other Arab states to attend, at least not publicly.

Each country has its own interests and its own view of how to assess the situation, the Egyptian diplomat said.

The Palestinians are themselves divided between Abbas's Fatah movement, which governs the West Bank, and the Islamist Hamas group, which seized control of the Gaza Strip in June.

Speaking on Israel Radio, Israeli Defense Minister Ehud Barak reaffirmed that a final agreement would not be implemented until Palestinians carry out commitments to crack down on militants under a 2003 U.S.-backed peace road map.

Barak said that meant action against militants must also be carried out in the Gaza Strip, which Hamas Islamists took over after fighting against Abbas's Fatah faction in June.

The question of (Abbas') capabilities will be put to the test, Barak said.

Senior Palestinian negotiator Saeb Erekat said Abbas regarded the West Bank and Gaza Strip as a single entity and understood the road map requirements covered both territories.

(Reporting by Will Rasmussen; additional reporting by Jerusalem bureau; Writing by Cynthia Johnston; editing by Sami Aboudi)

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