Peres and Defense Minister Binyamin Ben-Eliezer.

Neither Israelis nor Palestinians expressed optimism over the U.S. effort. "We need a lot of imagination," Peres said.

Overnight Tuesday, Israeli troops pulled out of the West Bank city of Jenin. Israeli military sources said the decision was timed, in part, for the arrival of Zinni. Jenin was the last of the six West Bank cities where Israeli troops had been deployed in the wake of the Palestinian assassination of former Israeli Tourism Minister Rehavam Ze'evi last month.

Israeli military sources said Jenin was the launching pad for numerous Palestinian suicide attacks inside Israel. They said most of the attacks were organized by the Islamic opposition groups Hamas and Islamic Jihad.

On Tuesday morning, two Palestinian gunmen opened fire with Kalachnikov assault rifles in a shooting spree into a crowd in the street market in the northern Israeli town of Afula. Two people were killed and more than 40 people were injured, 10 seriously. Israeli security forces shot and killed the gunmen.

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