BREMEN, Germany, March 31 (Reuters) - European Union foreign ministers debated on Saturday how to engage with the new Palestinian government and support an Arab peace initiative cautiously welcomed by Israel.

Diplomats said they were likely to agree on an informal policy of talking to ministers of the national unity government who are not members of the Islamist Hamas movement, which refuses to recognise Israel or renounce violence.

The 27-nation EU boycotted the Hamas-led government formed last year and called for a unity government between President Mahmoud Abbas' moderate nationalist Fatah party and Hamas that would reflect the international community's key conditions.

"We have welcomed this process as such and will make our further evaluation dependent on the decisions and deeds of this government, which naturally has consequences for cooperation with individual members of the government," German Foreign Minister Frank-Walter Steinmeier told reporters.

German Chancellor Angela Merkel left Germany on Saturday for a three-day trip to Lebanon, Jordan, Israel and the Palestinian territories, but said there was little cause for optimism.

"Now we must see how much movement we can get from this for the peace process in the Middle East. Although I think there is a very long, hard stretch ahead of us," she said in Berlin.

European External Relations Commissioner Benita Ferrero-Waldner has invited Finance Minister Salam Fayyad, a respected independent technocrat, to Brussels on April 11 to discuss ways of channelling aid to the Palestinians.

But she has cautioned against expecting an overnight resumption of direct assistance, saying a temporary mechanism to distribute aid bypassing the government would remain in place for a while longer.

France is pressing for a swifter resumption of contacts and aid to the Palestinian government, with the Netherlands the most reticent to embrace an administration that has not recognised Israel or even freed an Israeli soldier kidnapped last year.

"We need movement. Deadlock helps no one," Austrian Foreign Minister Ursula Plassnik said.

Luxembourg Foreign Minister Jean Asselborn urged the EU to make the most of hopeful signs in the Middle East.

"The Arab countries have invested themselves in the peace process and that is very positive. We asked for a unity government and we have got one, so we should use the opportunity," he told reporters. (Additional reporting by Tom Armitage in Berlin)

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