JERUSALEM (AFP) - Israel Prime Minister Ariel Sharon will meet new Palestinian leader Mahmud Abbas in two weeks, a Palestinian official said as the two sides prepared to discuss the transfer of security control in parts of the West Bank, fueling real optimism about progress towards peace.

The power transfer is due to take place following a first meeting Abbas and Sharon, the latest in a series of peace gestures between Israeli and the Palestinians amid a lull in violence.

"This meeting should take place a fortnight from now," said prime minister Ahmed Qorei´s top aide Hassan Abu Libdeh.

Abbas met Sharon when he was prime minister in 2003 but the proposed summit would be the first between Israeli and Palestinian leaders in over four years.

Backed by his top allies in Washington, Sharon refused to have anything to do with Abbas´s late predecessor, Yasser Arafat.

But in a major policy shift, Israel has called off offensive operations in the Gaza Strip after 2,000 Palestinian troops were deployed in the south and centre of the territory with orders to halt rocket attacks.

"This is a far-reaching step on our part, the biggest gesture since the start of the intifada, in the hope we might be able to turn a new page with the Palestinians," Israeli government spokesman Avi Pazner said Friday.

Abbas, on his first foreign trip as leader, briefed Egyptian President Hosni Mubarak on Saturday on efforts to secure a formal truce from militant groups to cement a recent informal lull in anti- Israeli attacks.

His order that Palestinian forces stop militant attacks across Gaza led even Sharon to hail a possible "historic breakthrough" in relations.

Late Saturday, former Palestinian security minister Mohammed Dahlan was due to hold talks in Tel Aviv with Israeli Defence Minister Shaul Mofaz on West Bank security, Palestinian sources said.

On the agenda was a possible halt to Israeli military operations in the West Bank and the release of some of the 8,000 Palestinians jailed in Israel, amid reports that officials are ready to free a first tranche of 900.

Sharon is also now prepared to coordinate with the Palestinians his plan to pull all troops and 8,000 settlers out of the Gaza Strip this year.

The United States sent special envoy William Burns to prepare the ground for a visit by new Secretary of State Condoleezza Rice at the end of next week.

Burns also detected "the best chance in years" for the peace process.

Despite the overall calm in the occupied territories, a mentally handicapped Palestinian man died after being shot by Israeli soldiers in southern Gaza on Friday, hospital sources said.

Washington also still regards the Islamic militant group Hamas as a terror organisation, despite its victory in local Gaza elections on Thursday, winning 77 out of 118 seats, against just 26 for Abbas´s Fatah faction.

Since the 1991 launch of the peace process, the most taxing questions have remained on hold: permanent borders, Jewish settlements, Palestinian refugees, water resources and the fate of Jerusalem.

In Cairo, Abbas met Mubarak on his efforts for a definitive demilitarization of the Palestinian uprising that erupted in September 2000 against the 38-year Israeli occupation.

Cairo has declared its readiness to send an additional 700 border guards to tighten security on its border with Gaza, in the wake of the Israeli pullout.

Abbas arrived in Egypt from Jordan where he had briefed King Abdullah II of Jordan, the only other Arab state to have signed a peace agreement with Israel. After Egypt, he is also scheduled to visit Russia and Turkey. (Copyright © 2005 Agence France Presse. 01/29/05)