'Negotiations Are Good'

"I never expected to see him again. My feelings cannot be described in words, the joy of the whole world is with me," said Adel Mesleh, brother of Salama Mesleh who was jailed in 1993 with a life sentence for killing an Israeli.

Freed Palestinian prisoner Jamil Nabi Annatsheh (C) is greeted by relatives upon his arrival in the West Bank city of Ramallah August 14, 2013. Israel freed 26 Palestinian prisoners on Wednesday to keep US-sponsored peacemaking on course for a second round of talks, but diplomacy remained dogged by Israeli plans for more Jewish homes on land the Palestinians claim for a future state. [Photo/Agencies]

"I am happy he was freed as a result of negotiations," the brother said. "Negotiations are good."

Most world powers say the settlements are illegal. Israel sees them as a security bulwark and the realisation of a Jewish right to biblical land, and insists on keeping swaths of them under any eventual peace accord.

Nearly 600,000 Israelis live in the West Bank and East Jerusalem, among 2.5 million Palestinians. Israel has published plans for 3,100 new settler homes in recent days alone.

Speaking to reporters in Brazil on Tuesday, US Secretary of State John Kerry said he had a "very frank and open, direct discussion" in a phone call with Israeli Prime Minister Benjamin Netanyahu.

Kerry appeared to associate the new settlement announcements with internal Israeli politics, saying "there are realities of life in Israel that have to be taken into account here."

Such construction helps mollify pro-settler factions in Netanyahu's coalition government, one of which, the Jewish Home party, opposes Palestinian statehood and tried unsuccessfully to vote down the prisoner release.

Israelis bereaved by Palestinian violence have also been angered by the amnesty. Palestinians regard the ex-inmates and thousands of others still in Israeli custody as heroes.

Few expect the latest negotiations to resolve issues that have defied solution for decades, such as borders, settlements, the status of Jerusalem and the right of return for Palestinian refugees. Yet neither Netanyahu nor Abbas wants to be seen as putting the brakes on the US peace drive.

"We set ourselves nine months during which we will try to get to something with the Palestinians," Israeli Defence Minister Moshe Yaalon told reporters on Tuesday.

"We have been trying in the 20 years since Oslo (interim peace accords), during 120 years of conflict. You can hear the hint of scepticism in my words, but we have decided to give it a chance."