(Updates for Barak-Fayyad meeting)

By Adam Entous

JERUSALEM, March 26 (Reuters) - Israel's defence minister said on Wednesday he had agreed to the transfer of new vehicles and equipment to Palestinian President Mahmoud Abbas's security forces and to ease travel restrictions for West Bank businesses.

But, citing fear of militant infiltrations, Ehud Barak signalled he would continue to resist Palestinian and Western demands for mass removals of checkpoints and roadblocks that restrict travel and trade within the occupied West Bank.

"The list of steps we intend to take to make life easier for the Palestinians, without relinquishing our overriding security responsibility, is important in moving the negotiations forward and maintaining a positive atmosphere," Barak told reporters before talks with Palestinian Prime Minister Salam Fayyad.

Israel hopes the measures, announced ahead of a weekend visit by U.S. Secretary of State Condoleezza Rice, will help blunt complaints it was not doing enough to bolster U.S.-backed peace talks and Fayyad's "law and order" drive in the West Bank.

Barak said the roster included equipment for Abbas's forces, including his elite Presidential Guard, and new vehicles, some of them armoured. Barak's office said he discussed the items with Fayyad but it declined to give details on types or amounts.

Previous shipments for Abbas's forces have been supplied by European and Arab donors, and were at times held up by Israel.

"The talks (with Barak) focused on implementing the road map obligations as well as security and economic conditions in the Palestinian areas," Fayyad's office said in a statement, referring to a 2003 U.S.-sponsored plan for a Palestinian state. A Palestinian official said Barak was "forthcoming" on issues like roadblocks and deployment of Abbas's forces. But the official said Fayyad would not immediately elaborate further, preferring to see if Israel was serious about implementation.

OLMERT VOICES DOUBTS

Israeli-Palestinian peace talks, revived at a conference in Annapolis, Maryland last November with the goal of reaching a statehood agreement before U.S. President George W. Bush leaves office next January, have shown little sign of progress.

The Abbas-Fayyad government, its mandate effectively reduced to the West Bank since rival Hamas Islamists seized control of the Gaza Strip in June, has accused Israel of foot-dragging.

Israel, in turn, has voiced doubt about whether the Palestinians are willing and able to fight militant groups.

"The fact that there were very few or almost no terrorist events ... is not because of the security forces of the Palestinians, it is because of the efficiency of the security forces of Israel," Israeli Prime Minister Ehud Olmert told foreign reporters on Wednesday. Barak said he also agreed to give special permission to a larger number of Palestinian business owners and project managers to travel across the West Bank.

But Barak has stopped short of promising to remove checkpoints, arguing they help to prevent attacks by militants. Palestinians say the roadblocks amount to collective punishment.

Ramiro Cibrian-Uzal, the EU ambassador to Israel, said he was informed by Israeli authorities that some 1,500 Palestinian business owners would get the special travel permits, and called it a "firmer commitment" by Israel to boost the peace process.

An Israeli official said some 1,000 Palestinians already had the special permits.

Israel said earlier this week that it would also allow up to 600 members of a Palestinian security force trained in Jordan under a U.S. programme to be deployed in the West Bank city of Jenin, once considered a hotbed of militant activity.

The force will not complete training before the end of May.

(Additional reporting by Wafa Amr in Ramallah and Jeffrey Heller, Ari Rabinovitch and Dan Williams in Jerusalem, Editing by Ibon Villelabeitia)

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