Palestinian leader Mahmoud Abbas and Israeli Prime Minister Ariel Sharon have declared a truce to end four years of Middle East violence.

Mr Abbas said the ceasefire, which begins immediately, would lead to a "new era of peace and hope".

Mr Sharon vowed to cease military action against Palestinian targets after militant groups halted violence.

In response, US Secretary of State Condoleezza Rice said it was the best chance for peace in years.

The truce was announced at talks between Mr Sharon and Mr Abbas in the Egyptian resort of Sharm al-Sheikh.

Hamas militants gave a lukewarm reaction to the summit, with the group's representative in Lebanon, Osama Hamdan, saying the ceasefire declarations were "not binding" on its members.

Mr Hamdan told the Associated Press news agency that Mr Abbas had taken a "unilateral stand" that was "not the result of the outcome of an intra-Palestinian dialogue".