Palestinian negotiators scrapped talks on Sunday before a peace conference this month, saying they were stopped at an Israeli checkpoint, and requested the preparatory discussions be moved abroad.
The incident came hours after Palestinian President Mahmoud Abbas held out to his divided people a vision of statehood within reach, hailing the conference due to be held in the United States as an historic opportunity for peace.
"We cannot carry out negotiations like this," chief Palestinian negotiator Ahmed Qurie said after Israeli soldiers blocked his team near Jerusalem while on its way to meet Israeli counterparts for pre-conference talks.
Negotiators are struggling to narrow differences over a joint statement to be presented at the Annapolis, Maryland conference expected in late November.
An aide to Qurie said his team informed Israel they wanted to move the preparatory talks to another country but offered no details.
"It shouldn't have happened ... that's not good for peace," said Mark Regev, spokesman for Israeli Foreign Minister Tzipi Livni, who leads the Israeli negotiating team. He said Livni called Qurie after the incident, promising an investigation.
In his forceful speech on the third anniversary of Yasser Arafat's death, Abbas repeated there could be no dialogue with Hamas Islamists who violently took over the Gaza Strip until what he described as the "black coup" was reversed.
Tens of thousands of flag-waving Palestinians turned out at the Muqata presidential compound in Ramallah, a West Bank city long a Fatah bastion, to remember the iconic late leader, show their support for Abbas and shout their condemnation of Hamas.
"These forces of darkness will not be able to hijack our history or close the windows to our future," Abbas said at the rally, referring to Hamas, which routed his Fatah faction in the Gaza Strip last June and opposes his peace efforts with Israel.
Abbas said the conference was "a historic opportunity to open a new page in the history of the Middle East based on the establishment of our independent Palestinian state with East Jerusalem as its capital".
Along with statehood, Abbas said, Palestinians sought the "return of Arab land occupied in (the 1967 Middle East war) and peace for "us and the Israelis and the peoples of this region".
In Gaza, Fatah supporters held rallies to honour Arafat, including a demonstration by some 10,000 people in the Bureij refugee camp, the largest since Hamas seized the territory.
At one rally, Hamas security forces clashed with Fatah supporters, firing into the air and wounding two demonstrators, Fatah officials said. Hamas officials had no immediate comment.
Preparations for the conference -- a chance for President George W. Bush's administration to turn its legacy around from the unpopular war in Iraq -- have been overshadowed by disputes over what issues to tackle.
Abbas gave no indication in his address whether progress had been made in narrowing differences with Israel on the wording of a joint document to be presented at the gathering.
Qurie and other members of Abbas's team had been scheduled on Sunday night to meet the Israeli team at a location inside Israel. The teams have been meeting regularly ahead of the Annapolis conference.
Earlier in Jerusalem, Israeli Prime Minister Ehud Olmert held a meeting on conference strategy with Livni, Defence Minister Ehud Barak and security chiefs, an official said. ( Reuters )