U.S. Secretary of State Condoleezza Rice holds a three-way meeting with the top Israeli and Palestinian peace negotiators on Wednesday amid dimming expectations that a comprehensive deal is possible this year.

Rice plans to meet separately with Israeli Foreign Minister Tzipi Livni and then sit down with her and former Palestinian Prime Minster Ahmed Qurei for an extended discussion.

The talks will be the latest in a series Rice has convened this year but, like the Israeli-Palestinian bilateral negotiations, have yet to produce tangible progress toward ending the six-decade conflict.

Beyond the intrinsic difficulty of resolving such controversial issues as the delineation of borders, the fate of Palestinian refugees and the status of Jerusalem, the effort is further hindered by the political divisions on both sides.

Israeli Prime Minister Ehud Olmert is under a cloud because of a corruption investigation, while the Palestinians are split between the Hamas-ruled Gaza Strip and the West Bank, where Palestinian President Mahmoud Abbas' Fatah party holds sway.

As a result, there is deep scepticism among Israelis, Palestinians and independent analysts that there is any chance of achieving U.S. President George W. Bush's goal of "resolving all outstanding issues" before he leaves office in January.

Olmert said on Monday a full agreement that includes Jerusalem was not within reach this year but it was possible that differences over borders and refugees could be bridged.

"No agreement without Jerusalem," Qurei flatly told reporters after he met Rice at the State Department on Tuesday. Asked about the chances of an agreement this year, Qurei looked up at the sky and said: "It's up to God."