(Updates with final-status talks to follow conference)

By Adam Entous

JERUSALEM, Oct 3 (Reuters) - Israeli and Palestinian leaders agreed on Wednesday that formal negotiations on Palestinian statehood would begin after a U.S.-sponsored conference expected next month, officials from both sides said.

But Israeli Prime Minister Ehud Olmert balked at Palestinian President Mahmoud Abbas's call for setting a specific timeframe for resolving final-status issues, including borders and the fate of Jerusalem and Palestinian refugees.

"After the November conference, they will start to negotiate a final agreement but with no timetable," said a senior Israeli official after Olmert hosted Abbas at his Jerusalem residence.

Israel has previously stopped short of saying the conference would restart final-status talks that collapsed in early 2001.

Palestinian negotiator Saeb Erekat said the conference "will launch permanent-status treaty negotiations" based on a joint document that will be presented to the forum.

Erekat said the issue of setting timelines would be discussed later. "I think this will be left for the conference to decide," he said.

After their one-on-one meeting, Olmert and Abbas brought together their negotiating teams for the first time and instructed them to begin drafting the joint document starting next week.

"These meetings (of the negotiating teams) are geared to and will bring about the formulation of that joint statement in time for the upcoming international meeting," David Baker, a spokesman for Olmert, told reporters after the session.

"The expectation is that they're going to be working on it and they will be producing a document suitable to both sides," Baker said. "The work on that has now just begun."

Olmert is under pressure from his cabinet not to give ground on sensitive issues and is seeking a broadbrush joint statement. Abbas hoped a detailed "framework" agreement would be submitted.

SECRET TALKS

Abbas adviser Yasser Abed Rabbo said no details about the joint document would be released while the negotiations are under way. He said the document would eventually be presented to the decision-making body of the Palestine Liberation Organisation (PLO) as well as Olmert's cabinet.

U.S. Secretary of State Condoleezza Rice plans to return to the region next week to assess the status of talks.

The conference is part of a U.S.-led effort to bolster Abbas and his West Bank-based government and to isolate Hamas Islamists who seized control of the Gaza Strip in June.

Hamas said the Olmert-Abbas meetings were aimed at ensuring "fundamental Palestinian issues" would not be addressed.

It was unclear to what extent Olmert was prepared to delve deeply into the "final-status" matters with a Palestinian leader who holds sway only in the West Bank.

Olmert has been weakened politically by corruption scandals and criticism of his handling of last year's war in Lebanon.

Olmert hosted Abbas in a Sukkah, an outdoor enclosure which observant Jews use for meals marking the Sukkoth festival. (Additional reporting by Wafa Amr in Ramallah and Nidal al-Mughrabi in Gaza and Ari Rabinovitch in Jerusalem)

AlertNet news is provided by