Jerusalem ? Israel rejected Palestinian President Mahmoud Abbas’ request for a quick release of prisoners to bolster nascent peace moves, saying Friday that Palestinian militants must first free a captured Israeli soldier.

The decision was a setback for the moderate Palestinian leader as he jockeyed with the radical Islamic Hamas group for popular support in the increasingly turbulent West Bank and Gaza. Abbas had hoped Israeli concessions would strengthen his argument that talks – not violence – are the Palestinians’ best hope for achieving a state.

Israeli Prime Minister Ehud Olmert, himself fighting low approval ratings, has sought in recent weeks to re-energize his government with a push to revive long-stalled peace efforts with the Palestinians.

The Israeli newspaper Yediot Ahronot reported Friday that Olmert was prepared to hold back-channel talks to resolve the intractable disputes that derailed previous peace efforts, including the final borders of a Palestinian state, the status of Jerusalem and the fate of Palestinian refugees. Olmert spokeswoman Miri Eisin declined to comment on the report.

Abbas said he had proposed the backdoor talks with Olmert at their summit last week, and the Israeli leader promised to consider it. Abbas did not say why he sought secret talks, but as an architect of the 1993 Oslo peace accord that was negotiated secretly between Israel and the Palestinians, he is known to champion quiet, informal diplomacy.

The Israeli government has tried to quietly strengthen Abbas, of the Fatah Party, in his rivalry with Hamas, a radical group that won control of the Palestinian parliament and Cabinet in January elections. The dispute between the groups has exploded into open warfare on Gaza’s streets in recent weeks.

At his summit with Abbas, Olmert offered to ease West Bank travel restrictions and to give the Palestinian leader

$100 million in Palestinian funds that Israel froze after Hamas’ election victory. Olmert also urged his Cabinet to consider a small prisoner release as a gesture to Abbas ahead of the Eid al-Adha holiday, which starts today.

That appeared to be a softening of the government’s earlier stance that it would not free any prisoners until the Hamas-linked militants who captured Cpl. Gilad Shalit in June release the Israeli soldier. The militants had demanded a wide-scale prisoner release, but Olmert refused, saying it would reward the militants, and instead launched a major Gaza offensive.

On Friday, with the Muslim holiday approaching, chances of a swift prisoner release appeared to have disappeared.

“Right now, it’s not on the agenda,” as long as Shalit remains captive, Eisin said.

Cabinet minister Zeev Boim told Israel Radio that a release, common at holiday time, “must not happen today because it would be misinterpreted.”

Abbas aide Saeb Erekat said Olmert was probably reluctant to buck Israeli public pressure not to release any of the 8,000 Palestinian prisoners until Shalit is released. “It’s unfortunate,” Erekat said, adding that the decision would hurt Abbas’ domestic standing.