Palestinian Authority President Mahmoud Abbas on Wednesday opened the Palestine Investment Conference in Bethlehem by declaring that east Jerusalem belonged to the Palestinian people and must be returned to them.

"East Jerusalem is ours and it's an occupied territory," Abbas said in his speech. "It must be returned."

The conference, the first of it kind in the PA, is aimed at boosting the Palestinian economy by encouraging local, Arab and international businessmen to invest in various projects.

More than 1,000 businessmen and politicians are attending the three-day conference, including some from Israel, the US and the EU.

The PA invested nearly half a million dollars in decorating the streets of the city and its surroundings ahead of the conference.

The deputy prime minister of the United Arab Emirates, Sheikh Muhammad Bin Hamdan al-Nihayan, is heading his country's delegation to the conference. The delegation arrived aboard a Jordanian helicopter that landed near the Dheisheh refugee camp.

An Iraqi businessman who asked not to be identified is also among the participants.

About PA 2,000 policemen have been assigned to enforce law and order and guard the guests. Four hundred journalists are in Bethlehem to cover the conference, which has been described by PA officials as an "historic event."

Abbas told the conference that he would pursue his efforts to bridge the gap in the peace negotiations with Israel.

"We are holding serious and thorough talks with the Israelis with the hope of reaching an agreement before the end of this year," he said. "Our hands are extended to anyone who wants security and stability for this precious land."

There were "encouraging reports" from Cairo regarding Egypt's efforts to achieve a truce between the Palestinians and Israel, Abbas said. He also welcomed reports about the launching of negotiations between Israel and Syria and the agreement reached Wednesday between the Lebanese government and Hizbullah.

Abbas urged Hamas to end its control of the Gaza Strip, saying he was prepared to hold early presidential and parliamentary elections soon after that happened.

Hassan Abu Libdeh, executive director of the conference, sounded optimistic as he talked to reporters. He said that a Saudi company has agreed to invest in a $250 million construction project in the West Bank.

He said the project would include office and apartment buildings, as well as malls and a hotel in Bireh, adjoining Ramallah.

Altogether, the Palestinians are hoping to attract during the conference some $2 billion in investment. Several Palestinian businessmen attending the conference expressed hope that Israel would ease travel restrictions in the West Bank and Gaza Strip so as to encourage investors.