Bethlehem, West Bank ? The first direct negotiations to end a three-week stalemate between Israeli forces and armed Palestinians barricaded in one of Christianity’s holiest shrines ended Tuesday with both sides citing progress and pledging to continue talking.

Prime Minister Ariel Sharon, meanwhile, told an American Jewish group he believed a U.S.-sponsored international peace conference could end Mideast hostilities. He credited the Israeli incursion into the West Bank with creating the climate for a settlement.

“Regional peace is within our grasp,” Sharon said. “I am optimistic about the future.”

Palestinians had been optimistic for a quick resolution in the talks to end the standoff at the Church of the Nativity.

But the key dispute remained. Israel says wanted militiamen inside the Church of the Nativity must be tried in Israeli courts or exiled abroad; the Palestinians propose sending them to the Gaza Strip under international escort.

Palestinian lawmaker Salah Taameri, who participated in the talks, said both sides were determined to reach a peaceful solution. Israel, he said, had agreed to evacuate four sick people from the church compound. He did not say if they were civilians, armed Palestinians or the clerics who have been inside since April 2.

Bethlehem Mayor Hanna Nasser called the meeting “important.” Taameri said the Gaza proposal “was discussed as an option.” Beyond that, he would only say delegates needed to consult with the Palestinian leadership before the talks resumed today.

Three Armenian priests left the church compound Tuesday after one of them displayed a sign with the words “Please Help” written in red paint.

Collaborators killed

With Israel’s West Bank offensive significantly scaled back nearly a month after it began, gruesome street scenes played out as masked Palestinian militiamen summarily executed fellow Palestinians accused of collaborating with Israel. Three men were shot dead in Hebron, and two of the bullet-riddled bodies were strung up by a mob.

The killings were carried out to avenge the Monday night Israeli killing of Marwan Zalloum, commander of the Al Aqsa Martyrs’ Brigade in Hebron.

“The fate of all collaborators will be like this,” a masked militiaman, wearing an Al Aqsa headband, said before he and six others sped away.

Late Tuesday, Israeli forces shot and killed three armed Palestinians who tried to infiltrate the Jewish settlement of Netzarim in central Gaza, the military said. Such infiltration attempts have been reported almost daily in the past two weeks.

The European Union foreign policy chief, Javier Solana was due to arrive today and meet with Arafat at his Ramallah office, besieged since March 29 by Israeli forces.

U.N. demands

Meanwhile, a disagreement was brewing between Israel and the United Nations over a fact-finding mission to the Jenin refugee camp, the site of the heaviest fighting during Israel’s West Bank offensive.

U.N. Secretary-General Kofi Annan rebuffed an Israeli demand to hold up the mission and ordered the high-level fact-finding team he appointed to arrive in the Middle East by Saturday.

Israel disputes Palestinian claims that civilians were massacred in the camp and that hundreds of people were killed, contending that the number of Palestinians killed was in the dozens and that most were gunmen.