The FINANCIAL -- TEL AVIV. Israel and Palestinians have agreed to resume the stalled peace talks and started to discuss the details of four-month indirect negotiations mediated by the United States, the U.S. Middle East envoy said.

Talks came to a halt in December 2008, when Israel launched an attack on the Gaza Strip in a bid to put an end to the firing of homemade rockets at southern Israel by Palestinian militants based in the enclave. The conflict left 1,300 Palestinians and 13 Israelis dead.

"I'm pleased that the Israeli and Palestinian leadership have accepted indirect talks. We've begun to discuss the structure and scope of these talks and I will return to the region next week to continue our discussions," George Mitchell said in a statement posted on the U.S. State Department web site on March 8.

"We also again encourage the parties, and all concerned, to refrain from any statements or actions which may inflame tensions or prejudice the outcome of these talks," Mitchell added.

Mitchell spent the last three days in the Middle East on a round of "shuttle diplomacy" between Jerusalem and Ramallah, and the talks got under way despite Israel's decision on Monday to give the go-ahead for 112 new homes to be built in a Jewish settlement in the occupied West Bank.

Settlement construction in the West Bank and East Jerusalem, both occupied by Israel since the 1967 Arab-Israeli War, has been the main obstacle to reviving peace talks.

Under the internationally agreed roadmap for Middle East peace, Israel is obliged to freeze all settlement construction activity, and remove unauthorized outposts built since 2001 from the Palestinian territories.

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