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Palestinian President Mahmoud Abbas has met with senior Israeli officials for the first time in months. The talks took place on the sidelines of an economic meeting in the Egyptian resort of Sharm El-Sheikh.

It was the first time Mr. Abbas met new Israeli Foreign Minister Tzipi Livni, and the first time he had met with any senior Israeli leaders in nearly a year.

Israel froze talks with the Palestinian government, after the Islamic militant group, Hamas, won an upset victory in January's election.

Senior Palestinian officials characterized the meeting as exploratory, or just the beginning of a resumption of dialogue.

Israeli Deputy Foreign Minister Shimon Peres was also in the meeting. He said the talks took place in what he called a good atmosphere.

"Very friendly, very open," said Shimon Peres. "We did not come to commit ourselves. Neither did the Palestinians come to commit themselves. But as a preparation and an opening, particularly on the economic side, where we were more specific, I think it was useful."

Mr. Abbas said he expects to meet with Israeli Prime Minister Ehud Olmert when Mr. Olmert returns from his visit this week to Washington.

The Palestinian leader also said he is starting a dialogue with Hamas leaders in the next few days, in an effort to end violence in the Gaza Strip among rival Palestinian factions. He called it a crisis.

He says civil war is a red line that nobody dares to cross, no matter what side they are on. He says civil war is forbidden.

Hamas and Mr. Abbas' Fatah party are battling - sometimes violently - over control of the security apparatus in Gaza.

Israeli officials described the talks in Sharm El-Sheikh as an effort to avert a humanitarian disaster in the Palestinian territories.

The Palestinian Authority is facing a fiscal crisis. Western countries have withdrawn their financial backing for the Palestinian government, since Hamas refuses to recognize Israel and renounce violence.

Israeli officials say they have released $11 million in Palestinian tax revenues that they had frozen in response to the Hamas victory.

Mr. Abbas also met on the sidelines of the World Economic Forum with the prime minister of Malaysia, Abdullah Ahmed Badawi. The Malaysian leader pledged $16 million to fund the Palestinian local government operations for the rest of the year.

"We want to assure that the bureaucracy works," said Abdullah Ahmed Badawi. "If it does not work, then of course, it cannot provide the services the people need."

It is not clear how the Malaysian funds will be transferred to the Palestinian Authority. Mr. Badawi said the details will be worked out when a senior Palestinian delegation visits Kuala Lumpur, which he hopes will be soon.

Mr. Badawi is the current chair of the Organization of the Islamic Conference. He urged the 56 other OIC members to find ways of supporting the humanitarian needs of the Palestinian people.