(Adds Fayyad comments, details) By Avida Landau JERUSALEM, Aug 17 (Reuters) - Israel confirmed on Sunday it would release 200 of some 11,000 Palestinians it holds prisoner in the hope of shoring up support for President Mahmoud Abbas and the peace talks he is conducting with the Jewish state. "The idea is to strengthen the process of dialogue, to strengthen the hand of the moderates, to strengthen the peace process," a spokesman for Prime Minister Ehud Olmert said before the cabinet agreed to his proposal to free about 200 people. Though the longest-serving Palestinian prisoner, in jail for 31 years, may be among those released, Abbas's prime minister Salam Fayyad said the gesture was "not enough". He demanded that Olmert free all the thousands of Palestinians Israel is holding. Olmert himself will shortly resign over a corruption scandal -- a factor along with Abbas's loss of the Gaza Strip to Hamas Islamists last year that has fuelled scepticism about efforts to conclude a peace deal before U.S. President George W. Bush, the sponsor of the current process, steps down in January. Hamas, which opposes these peace talks, complained that only prisoners loyal to Abbas would be freed and accused Israel of trying to heighten factional divisions among Palestinians. Foreign Minister Tzipi Livni, favourite to succeed Olmert in a party leadership contest next month, said Israel was showing Palestinians that talking, not fighting, was better for them. A previous prisoner release followed shortly after the two sides met at Annapolis in November to relaunch negotiations on creating a Palestinian state in the West Bank and Gaza. This time, significantly, among those to be freed on Aug. 25 will be two men who have each been in Israeli jails for some 30 years. Palestinians view the pair as particularly worthy of release, while many Israelis view them as undeserving killers. LONG SENTENCES Palestinian officials said Said al-Atabeh and Mohammad Abu Ali, would be among those released on a week before the start of the Muslim holy month of Ramadan. Israeli officials declined to confirm the names but did not deny the two would walk free. Atabeh, 57, of the Democratic Front for the Liberation of Palestine (DFLP) was arrested in 1977, accused of organising attacks on Israeli troops. Abu Ali, 52, was jailed in 1980 for killing a leader of Jewish settlers near Hebron. Though in prison, he was elected to the Palestinian parliament in 2006. Undone by accusations he took bribes -- which he denies -- Olmert has vowed to use his remaining weeks in office to pursue efforts for peace. As yet, talks overseen by U.S. Secretary of State Condoleezza Rice show no sign of unblocking key disputes over control of Jerusalem and helping Palestinian refugees. Abbas is weakened by Hamas's seizure of Gaza and disillusion among Palestinians in the Israeli-occupied West Bank that he can deliver a deal that improves their lives when Israel continues to defy demands that it halt Jewish settlement there. On the other side, the battle to succeed Olmert could well involve a general election that, polls indicate, may favour candidates who promise a tough line on Palestinian violence. (Additional reporting by Adam Entous and Joseph Nasr in Jerusalem, Nidal al-Mughrabi in Gaza, Haitham Tamimi in Hebron and Atef Sa'ad in Nablus; Editing by Alastair Macdonald)
Israeli police officers stand guard as Ethiopian immigrants protest outside the office of Israel's Prime Minister Ehud Olmert in Jerusalem August 17, 2008. Some 1,000 Israelis of Ethiopian descent took part ...
