Aides to Prime Minister Ehud Olmert and Palestinian Authority Chairman Mahmoud Abbas met yesterday for further preparatory talks in advance of the leaders' planned meeting, with the main topic being what gestures Israel will make to the Palestinians at that meeting.

Palestinian officials said afterward that they believe the meeting will take place in Jerusalem this coming Monday. Abbas announced that he hopes to meet Olmert before the end of the month.

But the Prime Minister's Office said a date for the meeting has not yet been set, and will not be until the preparatory talks are brought to a successful conclusion.

At yesterday's meeting, Olmert's aides stressed that the prime minister is unwilling to release any Palestinian prisoners before kidnapped soldier Gilad Shalit is freed. A source in the Prime Minister's Office added that he is unaware of any progress in the efforts to free Shalit.

But Palestinian sources said they thought a deal on Shalit's release in exchange for Palestinian prisoners could be concluded by the Id al-Adha (Feast of the Sacrifice) holiday, which falls next Friday.

Egyptian Foreign Minister Ahmed Aboul Gheit is due to come to Israel for a two-day visit next Wednesday, but it is not clear that this has any connection to the Shalit deal.

At yesterday's meeting, the Palestinians outlined the gestures they expect from Israel at the Olmert-Abbas meet. One of these is a prompt first meeting of a planned Israeli-Palestinian committee on the release of Palestinian prisoners. This committee will set criteria on which prisoners Israel will eventually release.

The Palestinians are also demanding the release of some of the tax money that Israel collects on the PA's behalf but has refused to transfer ever since Hamas assumed power. Palestinian sources said that they expect some $60 million to be transferred to Abbas in the first stage.

The aides reached agreement yesterday on removing certain Israeli checkpoints and other steps to increase Palestinian freedom of movement in the territories, but there was no agreement on Abbas' request that Israel allow the PLO's Badr Brigade to enter the territories. The brigade is currently stationed in Jordan.

Also yesterday, Olmert decided to press on with Israel's policy of restraint toward the Qassam rocket fire from Gaza, which has continued despite the declaration of a bilateral cease-fire. However, he informed Abbas that this restraint cannot last much longer if the launches of the past few days persist.

Olmert apparently does not want to jeopardize the meeting with Abbas, which he hopes will demonstrate that he is making diplomatic progress, by a harsh military response to the Qassam fire. Moreover, at a briefing yesterday, Israel Defense Forces Chief of Staff Dan Halutz and Shin Bet security service head Yuval Diskin told Olmert and Defense Minister Amir Peretz that Hamas and Islamic Jihad are interested in an Israeli military response to the Qassams, because they believe this would bolster them in their internal battle against Abbas' Fatah faction.

A senior PA official gave Haaretz an identical assessment: Hamas, he said, is making no effort to stop other organizations from firing Qassams because an Israeli military response would deflect public anger against Hamas over the recent violent infighting with Fatah. An Israeli incursion into Gaza would also force Abbas to shelve his proposal for new elections, the source said.

In addition, a government source said, though it has been breached time and again, the cease-fire has reduced the number of Qassam launches significantly, so "the benefits of ending the cease-fire would not be great."

Nevertheless, Peretz urged Olmert yesterday to reconsider the policy of restraint in the face of cease-fire violations, and so did Ministers Benjamin Ben-Eliezer (Labor) and Eli Yishai (Shas).