U.N. envoy sees cause for hope on Mideast peace

By Patrick Worsnip

UNITED NATIONS (Reuters) - The outgoing U.N. Middle East envoy expressed "guarded optimism" on Wednesday about prospects for peace in the region because of growing Palestinian-Israeli dialogue and international involvement.

But Michael Williams told the Security Council in a final report after just three months in the job that continued diplomatic and practical steps were needed to stop a renewed peace process from running out of steam.

Following a visit to the region, "I returned guardedly optimistic, but conscious of many challenges ahead," he said.

Williams, a Briton, said a "substantive dialogue" developing between Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert and reform efforts by a new Palestinian government had "created growing expectations."

Abbas and Olmert met most recently on Tuesday.

The appointment of former British prime minister Tony Blair as an international Middle East envoy, an Arab peace initiative and preparations for a U.S.-sponsored conference in November on Palestinian statehood had helped, he said.

The "Quartet" of Middle East negotiators -- the United Nations, European Union, United States and Russia -- will meet in New York on September 23 on the eve of the annual U.N. General Assembly gathering of heads of state and government.

The attempted relaunch of the peace process has been a paradoxical result of the takeover of the Gaza Strip by the Palestinian militant group Hamas from Abbas' forces in June.