On the sidelines of the talks in the Egyptian resort Mahmoud Abbas, the Palestinian president, is expected to meet Tzipi Livni, the Israeli foreign minister, in the highest-level talks between the two sides since Hamas came to power in January elections.

Shimon Peres, Israel's deputy prime minister, will also take part in the talks.

Peres, who is responsible for economic ties with the Palestinians, said: "During this meeting, we will not talk about borders but economic matters for which there is no reason to leave hanging."

As president of the Palestinian Authority and chairman of the Palestine Liberation Organisation, peace negotiations are the responsibility of Abbas rather than Hamas.

Hamas is not expected to send any ministers to the talks.

About 1,200 political and business leaders from the Middle East and beyond were expected in the Red Sea resort for the annual World Economic Forum (WEF) Middle East.

The talks will be inaugurated by Hosni Mubarak, the Egyptian president. Talks will focus on reforms and the issue of youth employment.

Participants

Among the highest-profile participants of the forum will be Robert Zoellick, the US deputy secretary of state, who has been involved in consultations in the region.

He was instrumental in securing a partial peace deal for Sudan's Darfur region earlier this month.

Other prominent guests include Emile Lahoud, the Lebanese president, and Fuad Siniora, the prime minister, as well Recep Tayyip Erdogan, the Turkish prime minister.

The forum was last held in 2005 in Jordan, the only other Arab state apart from Egypt to have a peace treaty with Israel.