HIGHLIGHTS: Egypt to Propose Peace Plan to Peres||Israel Bans Palestinians from Driving in West Bank Cities, Cuts Off Rafah||Saudi Press Blames Sharon, U.S. for Latest Spate of Palestinian Resistance Attacks against Israelis||Sharon under Pressure for Failure to Stem Palestinian Resistance Attacks|| STORY: Israeli Foreign Minister Shimon Peres began talks in Egypt with President Hosni Mubarak aimed at finding ways to stop the cycle of violence and restart Israeli-Palestinian peace talks.

Mubarak, accompanied by Foreign Minister Ahmed Maher, received Peres at the presidential palace in northern Cairo, in the first such encounter between the two in more than a year, according to an AFP journalist.

The meeting comes amid a wave of Palestinian attacks against Israeli targets that killed at least 14 people over the weekend and seven people last week.

The Palestinian Resistance group Hamas had pledged retaliation for a deadly Israeli air strike in Gaza City last month that killed one of its leaders and 14 other people, including nine children.

Maher said Sunday that "Egypt will propose to Israel what needs to be done to achieve peace and security for both the Israeli and Palestinian peoples and to reach a political settlement" during the Peres-Mubarak talks.

He also called on Israel "to withdraw its forces from areas of the Palestinian Authority and to stop its aggression against the Palestinian people."

Egyptian sources quoted by the Saudi-owned, Arabic-language daily Al-Hayat said Peres would propose to Mubarak ways "to emerge from the current crisis and restart the negotiations."

Al-Hayat, which is based in London and distributed in Arab capitals, said Peres had requested the meeting.

Last month Israeli Defense Minister Binyamin Ben Eliezer, parliamentary Speaker Avraham Burg and Transportation Minister Ephraim Sneh visited Egypt for talks with Egyptian leaders.

ISRAEL BANS PALESTINIANS FROM DRIVING IN WEST BANK CITIES, CUTS OFF RAMALLAH

The Israeli occupation army meanwhile announced it was banning Palestinians from driving in five West Bank cities and isolating a Gaza Strip town following a spate of deadly attacks by Palestinian Resistance groups in less than 24 hours.

The towns affected are Nablus, Tulkarem, Qalqiliya, Ramallah and Jenin.

Until now, Palestinians in these areas were only able to drive when Israel lifted its curfew imposed on cities across the West Bank.

The army also announced it has encircled the town of Rafah in the southern Gaza Strip on the border with Egypt.

SHARON, U.S., TO BLAME FOR RESISTANCE BOMBINGS: SAUDI PRESS

Saudi newspapers blamed Israeli Prime Minister Ariel Sharon's "crimes" and Washington's "blind" backing of Israel for the continued Palestinian bombings.

"All available evidence confirms that Sharon and his military junta cannot live in peace. They can only live under the sound of bombs and by seeing horrified women and children and pieces of flesh," Okaz daily said.

"What is strange is the call by US President (George W.) Bush yesterday for world leaders to stop 'anti-Israeli terrorism'," the daily said in an editorial.

"The terrorism that needs to be stopped ... is certainly the bigger terrorism, Sharon's terrorism."

"Sharon's aggression and his daily killings of the Palestinians made them respond with these Resistance operations," Al-Jazirah said.

SHARON UNDER PRESSURE OVER FAILURE TO STEM PALESTINIAN RESISTANCE ATTACKS

After the failure of his massive reoccupation of the West Bank to stem the tide of Palestinian Resistance bombers and their deadly toll, Prime Minister Ariel Sharon is under pressure to explain where his new policy of banishment and house demolitions is taking Israel.

"Sharon Owes Us an Answer" said the mass-circulation Maariv newspaper Monday, a day after a bout of Palestinian attacks left 12 Israelis dead.

"Ariel Sharon, the man who made empty promises in his election campaign to restore security to our homes, our streets, our places of entertainment and to the buses we take ... does not address the public to explain himself," editor-in-chief Amnon Dankner wrote.

Despite the latest wave of vitriolic editorials and attacks from both ends of the political spectrum, opinion polls show Sharon still has strong support on his handling of security issues, while criticism is directed mainly at his government's performance on the economic front.

SHARON ORDERS INVESTIGATION INTO ISRAELI PEACE GROUP

Sharon has meanwhile ordered an investigation of the small pacificist group Gush Shalom for threatening war crime charges against reserve army officers in the occupied territories, the Haaretz daily reported.

Sharon told Israel's attorney general Elyakim Rubinstein to start an enquiry into the group on Sunday for sending letters to 15 reserve officers and threatening legal action against them before the Hague's International Criminal Court (ICC), the daily reported.

Justice Minister Meir Shittrit denounced Gush Shalom as a "fifth column" and "traitor" to Israel, in comments on Israeli radio on Monday.

Over the past few month, Gush Shalom sent letters to army officers on duty in the territories accusing them of war crimes and warning the group was watching them and compiling files to send to the ICC, Haaretz said.

The letters were signed "Gush Shalom's team for the collection of evidence against war criminals" and targeted officers identified in press reports.

The 600-member group, which counts another 6,000 supporters, was defiant Monday in the face of Sharon's ire.

PHOTO CAPTION

Egyptian President Hosni Mubarak, right, receives Israeli Foreign Minister Shimon Peres, Monday Aug. 5, 2002, at the presidential palace in Cairo, Egypt. Peres's visit to Egypt comes at a tense and violent time in Israel and the Palestinian territories. (AP Photo/Hasan Jamali)
- Aug 05 7:24 AM