CAIRO, Feb 23 (Reuters) - Egyptian President Hosni Mubarak has seen signs of "slow progress" in Israeli-Palestinian peace negotiations and hopes an agreement can be reached this year, Egypt's state news agency said on Saturday.

"There are indications of slow progress between the two negotiating teams, but follow-up -- especially from the American side -- is important and necessary to overcome the difficulties facing the talks," Mubarak said in remarks carried on state news agency MENA.

Mubarak, an ally of Washington whose country was the first in the Arab world to sign a peace treaty with Israel in 1979, gave no details on the kind of progress being made.

The United States hopes to get a peace treaty between Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert by the time U.S. President George W. Bush leaves office in January 2009. But talks have moved slowly.

Both sides agreed on Tuesday to accelerate negotiations, which had been stalled by disputes over Israeli plans to build new homes near Jerusalem and Olmert's insistence on putting off talks on the fate of the holy city.

Uncertainty over Gaza and security concerns have also clouded talks ultimately aimed at creating a Palestinian state.

"I sincerely hope the Palestinian and Israeli sides will reach a peace agreement within the current year, as U.S. President Bush promised during his latest tour of the region," Mubarak said in remarks MENA said were made to a Saudi paper.

"But the matter requires serious involvement from the United States and the rest of the parties of the international Quartet (of Middle East mediators) in the difficult negotiating process over final status issues," he added.

Mubarak said Egypt was also working to lift the Israeli-led blockade of the Gaza Strip and to re-open the Gaza-Egypt border crossing at Rafah in accordance with a deal in place before Islamist Hamas militants seized control of Gaza in June.

In the Sinai town of El Arish on Saturday, an Egyptian security delegation held another round of talks with Hamas officials over the status of the Rafah border crossing, where Hamas has demanded a key role.

Hamas militants blew open the Gaza-Egypt border last month, allowing tens of thousands of Palestinians into Egypt to seek relief from the blockade. The border has since been resealed.

A Hamas official at the El Arish talks, Saeed Seyam, said Hamas asked Egypt to open the border for three days so Gazans still in Egypt could return home. Seyam said Egypt agreed to study the request, and had also asked for calm on the border.

The Egyptian government says it would like the Palestinian Authority to take charge at the crossing point, but Abbas and his Fatah group have little influence in Gaza. (Writing by Cynthia Johnston)

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