SHARM EL-SHEIKH, Egypt - President George W Bush launched the most ambitious US Middle East peace mission in two years on Tuesday and said a summit with Arab leaders had advanced the "road map" to peace.

"We have made progress on a broad agenda," he said after the summit hosted by Egypt's President Hosni Mubarak in the Red Sea resort of Sharm el-Sheikh. The US president won an Arab vow to try to choke funding to "terrorist groups", but he also urged Israeli action on Jewish settlements in the West Bank and Gaza.

"We are determined to keep moving forward," said Bush, who moves straight on to a landmark summit with the Israeli and Palestinian premiers on Wednesday in Aqaba, Jordan.


Ahead of that meeting, Israel freed around 100 prisoners in a goodwill gesture the Palestinians called cosmetic. Despite the positive moves, violence crackled in Gaza and the West Bank.

In an outdoor address, the sea behind him and Mubarak at his side, Bush hailed a pledge by five Arab leaders to crack down on violence and said if all sides met their obligations, progress could be made to Palestinian statehood and a secure Israel.

"Today I am pleased to stand with leaders of the Arab world who are committed to these principles," he said.

Bush met Mubarak before they both joined Saudi Crown Prince Abdullah, Jordan's King Abdullah, Bahrain's King Hamad and Palestinian Prime Minister Mahmoud Abbas, making his debut on the international stage.

Syria and Lebanon, two frontline Arab states that have yet to make peace with Israel, were absent.

Mubarak, reading a statement from Arab leaders, said Arabs welcomed the road map and Bush's commitment.

"We will use the full force of the law to stop funds getting to illegal organisations including terrorist groups," he said.

In a conciliatory gesture to his Arab hosts Bush said before the talks that Israel had to deal with Jewish settlements.

"Israel must make sure there is a continuous territory that the Palestinians can call home," he said.

Freezing settlement-building is central to the road map drafted by the United States, United Nations, European Union and Russia.

US hopes for progress have been buoyed by word Israeli Prime Minister Ariel Sharon is to announce plans to uproot some rogue Jewish settler outposts, though it is unclear how many.

The international community considers the settlements illegal, although Israel disputes this.

A Sharon aide said Bush's remarks were no surprise. "All this will be discussed at tomorrow's meeting," he said.

A senior Saudi official said after the summit in Egypt: "I hope that this laying of the groundwork for peace in the Middle East, as tough as the challenge is, will continue in Aqaba tomorrow. It is there where the action should really begin."

Bush, who meets Sharon and Abbas in Aqaba, wants support for the road map, the farthest-reaching peace plan of Bush's 2-1/2 years in office. It outlines reciprocal steps by Palestinians and Israelis leading to a Palestinian state by 2005.

Syria criticised the latest US initiative as a bid to end Palestinian resistance and accused Washington of turning a blind eye to Israeli "crimes".

Palestinian Foreign Minister Nabil Shaath said the summit was a success because it "deepens the commitment of President Bush and his engagement in this Palestinian-Israeli conflict".

Bush has refused to meet veteran Palestinian leader Yasser Arafat, still influential among Palestinians who see him as the father of their struggle but accused by Israel of wilfully failing to stop militant attacks against the Jewish state.

US Secretary of State Colin Powell warned Arafat against any attempt to be a "spoiler" in the peace process.

Abbas, outspoken against Palestinian violence, took office as the Palestinians' first prime minister in late April.

The high-level talks at the summit have raised hopes for ending 32 months of Israeli-Palestinian bloodshed, but doubts remain over each side's commitment to implementing the plan.

Among the prisoners freed by Israel was the longest-held Palestinian prisoner, Ahmad Jbarah, dubbed the "fridge bomber" for a 1975 attack in which explosives packed into an abandoned refrigerator killed 13 people on a Jerusalem sidewalk. He is now a white-haired 67-year-old.

Palestinian cabinet member Ziyad Abu Amr said the amnesty was cosmetic, adding: "We demand the release of all prisoners."

In a sign of the obstacles ahead, Israeli troops shot dead a Palestinian security man in the Gaza Strip.

However, Israel's readiness to begin removing West Bank outposts, coming on the heels of promises from Abbas to rein in militant violence, could help smooth the way for the Aqaba summit.

More than 200,000 Jews live in settlements scattered among the more than 3.5 million Palestinians of the West Bank and Gaza Strip, lands Israel has occupied since the 1967 Middle East war.