Israel freed nearly 200 Palestinian prisoners to a hero's welcome in the West Bank on Monday, seeking to bolster President Mahmoud Abbas as Secretary of State Condoleezza Rice began a new peace mission.

Making her seventh visit to Israel and the Palestinian territories this year in the long-shot U.S. effort to secure a peace agreement by December, Rice welcomed the release as "something that matters a lot to the Palestinians."

She said she still aimed for a peace deal before President George W. Bush leaves office in January but played down chances of any partial accord in time for the September U.N. General Assembly.

"It's extremely important just to keep making forward progress rather than trying prematurely to come to some set of conclusions," Rice told reporters as she flew to Tel Aviv.

"We continue to have the same goal which is to reach agreement by the end of the year," Rice said. She added later Washington was not pressuring the sides to "bridge the gaps," and acknowledged it would be hard to strike a deal this year.

Earlier, several thousand Palestinians, many of them waving flags of Abbas's Fatah faction, turned out at the Palestinian Authority compound in the West Bank city of Ramallah to welcome the 198 prisoners, including four women, released by Israel.

"There is no doubt that we seek peace and we are trying to seek our goals -- and there won't be peace without the release of all prisoners," Abbas said at the celebration.

Some 11,000 Palestinians are in Israeli prisons and securing their release is a highly emotive issue in Palestinian society, which regards them as symbols of resistance to occupation.

The longest-serving Palestinian prisoner in Israeli custody, Said al-Atabeh, 57, was among those freed. "This is a great joy for our mothers and our people but it remains a small step because we left behind us thousands of prisoners," Atabeh said.

Atabeh was arrested in 1977 and sentenced to life imprisonment after being convicted of involvement in bombings that killed an Israeli woman and wounded dozens of people.

"It's not easy to release prisoners, especially prisoners that were involved directly in terrorist acts against innocent civilians," said Mark Regev, a spokesman for Israeli Prime Minister Ehud Olmert.

BUILDING CONFIDENCE

About half of the prisoners on a release list published by Israel were to have completed their sentences next year, but 43 had at least five more years to serve. Offences listed next to prisoners' names ranged from stone-throwing to shooting attacks.

Regev said Israel was making a "confidence-building" gesture to Abbas that could boost Fatah after it lost control of the Gaza Strip to Hamas Islamists last year. The release, Regev said, could "serve to strengthen" the peace process.

Few analysts believe Rice, who on Tuesday will see Olmert in Jerusalem, Abbas in Ramallah and hold a three-way meeting with their chief peace negotiators, can secure a major breakthrough.

Progress towards a peace deal has been hampered by violence, Israeli settlement expansion and political uncertainty in Israel stemming from a corruption scandal involving Olmert.

In remarks on Friday, Israel's chief negotiator, Foreign Minister Tzipi Livni, cautioned against any outside pressure to paper over differences or try to achieve a deal that would fall short of the "comprehensive agreement that we want to reach."

Livni is seen as the frontrunner in a Kadima party race to replace Olmert, undermined by the corruption scandal. He has said he would resign after his successor is chosen.

Olmert could stay on for months as caretaker prime minister until a new government is formed, although many doubt that as a lame duck leader he would be able to put a peace deal in motion.

Speaking after Rice met separately with Livni and Ahmed Qurie, the chief Palestinian negotiator, a U.S. official said the Bush administration would work methodically toward a peace deal rather than making a dramatic, last-minute push.

"We would not want to do that at the expense of losing the progress that is being made," the official, who asked not to be named, told reporters.