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GAZA CITY, Gaza Strip -- An emboldened Palestinian President Mahmoud Abbas told President Bush on Monday that now is the time to renew Mideast peace talks, as the emergency government he installed reaped its first windfall when Europe promised to restore crucial aid.

Days after Hamas' violent takeover of Gaza, the Islamic militants and Abbas' Fatah are headed in vastly different directions. While Hamas faces deepening isolation, Abbas has received an outpouring of international support.

Bush lent critical support in a phone call to Abbas, who replaced the Hamas-led Palestinian government after the group seized Gaza. The U.S. prepared to lift its sanctions on the Palestinian government now that it no longer includes Hamas.

Russia also said it supported Abbas' move to form an emergency government, but urged him and Islamic Hamas to seek a "wide-ranging dialogue."

The EU traditionally has been the Palestinian Authority's largest donor, and the reinstatement of hundreds of millions of dollars in aid, cut off after Hamas took power 15 months ago, could signal the beginning of the end to a crippling international boycott.

Abbas hurriedly swore in the new Cabinet on Sunday, days after dissolving a unity government between his Fatah movement and Hamas.

The rift has left the Palestinians with two governments - a Fatah-allied government in the West Bank and the Hamas leadership in Gaza. Abbas seeks peace with Israel, whereas Hamas, which killed hundreds of Israelis in suicide bombings, is sworn to the Jewish state's destruction.

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The dispute has endangered the Palestinians' goal of forming an independent state in the two territories, which are located on opposite sides of Israel.

The international community has largely rallied behind the Abbas government, led by Prime Minister Salam Fayyad, an internationally respected economist.

In a major boost to Abbas, EU foreign policy chief Javier Solana announced in Luxembourg on Monday that the 27-nation bloc would resume direct financial aid to the Palestinian Authority now that Hamas is no longer part of the government.

"We absolutely have to back" the new government in the West Bank, said Luxembourg Foreign Minister Jean Asselborn. "The question of today is: How can we help the 1.4 million people in Gaza?"

Riyad al-Malki, the new Palestinian minister of information and justice, welcomed the announcement.

"There are encouraging steps. We hope that these steps will be carried out quickly," he said.

Both the Haniyeh and Fayyad governments profess to represent Palestinians in both the West Bank and Gaza. To drive home that point, al-Malki said the EU aid would also go to pay salaries for government employees in Gaza.

The United States, another major donor to the Palestinians, has said it would end its financial embargo, while Israel has said it would consider unlocking $550 million in customs duties it has withheld from the Palestinians since Hamas took power.

The White House said Bush called Abbas on Monday "to express support for him and the Palestinian moderates."

Abbas told Bush that "this is the time to resume the political negotiations and to revive the hope of the Palestinian people," Abbas spokesman Nabil Abu Rdeneh said.

© 2007 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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