Police said they suspected the 20-year old from Nazareth had been killed by Palestinian resistance groups.

Within hours of Shaichat's disappearance a week ago, police began searches near the soldier's home after a witness said he dropped the soldier off at a nearby road junction.

"There is no question from the evidence gathered that we are talking about a nationalist or terrorist murder," said Israeli police spokesman Gil Kleiman.

"The evidence points to the fact that Palestinian militants killed the soldier."

"Shocking incident"

Kleiman said Shaichat's body was found buried in an olive grove between the Israeli Arab villages of Mashad and Kfar Kana.

He added that items found at the site suggested he had tried to flee.

Foreign Minister Silvan Shalom called the killing "a shocking incident" and vowed "to bring the perpetrators swiftly to justice."

Israeli security officials said they have intelligence indicating that resistance groups were plotting to kidnap soldiers to use as bargaining chips to secure the release of Palestinian prisoners.

However, they said they had not received any claims of responsibility as yet.

The leading resistance groups waging a 34-month-old uprising for independence have declared a three-month truce.

Jerusalem talks

Abbas discussed Jerusalem's
future status with Mohammed V1

Meanwhile, Palestinian prime minister Mahmud Abbas met Morocco's King Mohammed VI on Monday for talks on Middle East peace efforts and the future status of Jerusalem.

Abbas, who is on his way back home after holding landmark talks with US President George W Bush, met the Moroccan monarch in the northern city of Tetouan.

Their talks came a day after a weekend meeting in London between Moroccan Foreign Minister Mohamed Benaissa and his Israeli counterpart Silvan Shalom.

It was the first meeting of Israeli and Moroccan foreign ministers since October 2000 and came ahead of Israeli Prime Minister Ariel Sharon's trip to Washington this week.

Religiously senstive issue

Abbas said he wanted to discuss plans to hold an Arab meeting on the status of Jerusalem with King Mohammed, who is head of the Al-Quds Committee of the Organisation of the Islamic Conference.

In an interview with a Greek newspaper published on Monday, former Israeli prime minister Shimon Peres proposed that the Old City of Jerusalem should be placed under UN control with the rest of the city divided between Israel and a future Palestinian state.

The future status of Jerusalem - which houses sites holy to Christians, Jews and Muslims - is the most politically complex and religiously sensitive issue standing in the way of an peace agreement in the region.