Jerusalem ? Israel signaled a willingness Friday to move ahead with peace talks despite a deadly attack on a Jewish seminary in Jerusalem. But a U.S.-backed Egyptian initiative for a cease-fire between Israel and Hamas appeared to be in trouble because of the violence, which shattered four years of relative calm in the holy city.

Outside the bullet-scarred seminary, thousands of mourners marched in funeral processions Friday for the eight young students gunned down by a 25-year-old Palestinian from east Jerusalem whose family said he had been distraught over this week’s carnage in the Gaza Strip.

Despite the bloodshed, an Israeli official said his country would not cut off peace talks with the moderate Palestinian leadership – an apparent nod to Washington’s insistence that extremist violence not be allowed to derail efforts to forge a deal by year’s end.