CAIRO - Israeli President Shimon Peres held discussions in Egypt yesterday on efforts to restart Middle East peace talks after the Egyptian president accused Israel of creating obstacles to a settlement with the Palestinians.

Egypt, the first Arab state to sign a peace deal with Israel, has long played a mediation role. That has recently included involvement in a bid to secure an Israeli soldier's release from Gaza in return for Palestinian prisoners.

Speculation has been rife that a deal to free Gilad Shalit in exchange for hundreds of Palestinian prisoners might be concluded by month-end.

A day before Peres arrived, Egyptian President Hosni Mubarak told Parliament that Israel was making "new obstacles" to peace.

Egypt and other Arabs have blamed the United States for not doing enough to push Israel to stop building settlements on occupied Palestinian land.

Peres last visited Egypt in July for talks with Mubarak. He was met in Cairo by Foreign Minister Ahmed Aboul Gheit, a witness said.

An Israeli diplomat said talks were expected to cover Egypt's mediation between rival Palestinian factions.

Egypt has been hosting reconciliation talks for more than a year between Palestinian President Mahmoud Abbas's Fatah group, which leads the Palestinian Authority in the West Bank, and the Islamist group Hamas, which has controlled Gaza since 2007. - Reuters