Rival Lebanese leaders clinched a deal yesterday to end an 18-month political feud that exploded into deadly sectarian fighting this month and nearly drove the count

ry to a new civil war.

The agreement, announced by Qatari Prime Minister Sheikh Hamad bin Jassem bin Jabr al-Thani after days of tense talks in Doha, will see the election of a president for Lebanon on Sunday.

Lebanon's US-backed Prime Minister Fuad Siniora described the deal with the Iran and Syria-backed opposition as a "great achievement in the history of the Arab nation and the history of Lebanon."

A political standoff this month erupted into deadly street battles, the worst sectarian unrest in Lebanon since the 1975-1990 civil war.

The Lebanon deal came as Israel officially confirmed it is holding indirect peace talks with Syria mediated by Turkey - the first official confirmation of contacts between the two.

Israel and Syria are bitter enemies whose attempts at reaching peace have repeatedly failed in the past, most recently in 2000. The nations have fought three wars, and their forces have also clashed in Lebanon.

The accord on Lebanon was hailed by regional states including Lebanon's former power broker Syria and in Beirut where an opposition protest that has turned the heart of the capital into a virtual ghost-town was finally ending.

The deal covers the election of army chief Michel Sleiman as president, the formation of a national unity government and a ban on the use of weapons in any internal conflict.

Street battles in early May saw fighters from Hezbollah and its allies temporarily seize control of large swathes of west Beirut from their Sunni rivals and left a total of 65 people dead.

Lebanese, battered by years of conflict, reacted with relief but were also wary it might be only a temporary reprieve for the deeply divided nation.

Meanwhile, Israel yesterday unveiled plans to build new houses in a Jewish settlement near Bethlehem in the occupied West Bank, defying international calls to freeze such activity.

AGENCIES