Netanyahu cancels peace talks over Palestinian unity progress

Israeli prime minister Benjamin Netanyahu cancelled a planned session of peace talks with Palestinian negotiators on Wednesday after news of a unity deal between the Palestine Liberation Organization and Hamas was announced.

"Israel has canceled a negotiations meeting that was expected to be held this evening," a statement released by the prime minister's office on Wednesday said, without further explanation, according to Reuters.

The cancellation comes hours after top Palestinian political leaders from the Palestinian Liberation Organization and Hamas announced a reconciliation deal after more than seven years of political division.

Israeli officials lambasted the deal, with economy minister and chairman of the "Jewish Home" party Naftali Bennett saying: "The Palestinian Authority has become the world's largest terror organization; we have entered a new political era in the Mideast," according to Israeli newspaper the Jerusalem Post.

Bennett added that just as the US does not talk with al-Qaeda, Israel should not negotiate with the Palestinian Authority, who he called "killers."

The unity deal authorized the Palestinian president to set a date for new elections and signaled a potentially historic reconciliation between the two major Palestinian political factions, the Fatah-dominated Palestinian Authority in the West Bank and the Hamas-ruled government in the Gaza Strip.

Earlier, Palestinian officials announced that they had agreed to form a unity government within five weeks that will be headed by either President Mahmoud Abbas or former Deputy Prime Minister of the 2006 unity government Nasser al-Din al-Shaer, who is a member of Hamas.

The parties also agreed that both Hamas in Gaza and Fatah in the occupied West Bank would release prisoners detained for their political affiliation.

The unity deal comes amid a major impasse in ongoing US-backed peace talks between the Palestinian Authority and Israel, which were re-activated in July.

Israel has announced plans to build thousands of settlement homes across the occupied West Bank since the start of talks, angering the Palestinians.

In late March, meanwhile, Israel refused to release the final round of Palestinian veteran prisoners that it had promised to release as part of a trust-building measure, participating the current crisis.