Jerusalem: Israeli Prime Minister Ariel Sharon and his Palestinian counterpart Mahmud Abbas expressed hope for peace as they headed into talks on July 1night aimed at ending months of bloodshed.

The two leaders both read statements to reporters outside Sharon's Jerusalem office, alternating between optimism and hardened negotiating positions.

Sharon balanced his old image, that of venerable hawk, and his new one as peacemaker which came to the fore a month ago when he pledged his commitment to the US-backed peace roadmap at a Jordan summit with Abbas and US President George W Bush.

"We have the chance to create a better future, a better life, a future of opportunity and hope. This appears more achievable than in the past," Sharon said.

"I will not spare any effort to reach a political settlement. This is my hope, this is the mission that I have taken upon myself to bring peace to the region."

In a line aimed at the Right-wing constituency that brought him to power, he swore Israel would not make "any compromise with terrorism".

"My first and foremost responsibility is to the security of Israel and its citizens," he said.

The ex-General vowed, "We will continue to battle terrorism until it is totally defeated."

Abbas, meanwhile, voiced optimism, but also sounded a tough note about Israel's military tactics, as he sought to counter accusations at home he is a puppet of the Americans and Israel whose pressure to marginalise Palestinian leader Yasser Arafat helped create his job.