Israeli peace negotiations had reached their lowest point in 20 years

Egyptian President Hosni Mubarak's envoy Osama al-Baz will resume a mediation bid between Israel and the Palestinian Authority according to Egypt's ambassador to Israel. "He will come back next week after we consult with the parties concerned to find a suitable agenda," ambassador Mohammed Bassiony told Israeli's army radio.

Egypt stepped up its mediation efforts after the United States failed to defuse a crisis over Israel's start of work on a Jewish settlement in Arab east Jerusalem in March.

Baz's shuttle diplomacy between Israeli prime minister Benjamin Netanyahu and Palestinian "president" Yasser Arafat has so far failed to achieve a breakthrough.

"Now he (Baz) is dealing with the main issues, not procedures" Bassouny said.

Egyptian foreign minister Amr Moussa said in Jordan on June 24 Arab Israeli peace negotiations had reached their lowest point in 20 years."We have to be optimistic. But I am not," Moussa said.

The three-month-old deadlock in peace negotiations has been punctuated by outbursts of violent clashes between Palestinian demonstrators and Israeli troops.

Moussa reiterated that Israel must suspend all settlement building on Arab land before progress could be made. Israel, which asserts it has the right to build on lands it captured in the 1967 Middle East War, rejects the demand.