Yesterday’s resumption of direct talks between Israeli and Palestinian leaders in Washington is covered extensively this morning. The Times, Independent, Financial Times, Guardian and Independent i all report that  Israel’s Justice Minister Tzipi Livni, Prime Minister Benjamin Netanyahu’s envoy Yitzchak Molcho and Palestinian negotiators Saeb Erekat and Mohammad Shtayyeh met at the State Department to begin talks on the parameters for peace negotiations. All reports cover the appointment by US Secretary of State John Kerry of Martin Indyk, a former-US Ambassador to Israel, as the United States’ representative during the talks. The Telegraph suggests that the two sides have agreed to a nine-month timeframe for negotiations on substantive issues while the Independent online includes a profile of Indyk. Talks will continue in Washington today.

In the Telegraph, Con Coughlin says that there is reason for optimism as talks begin, while Harriet Sherwood in the Guardian argues that scepticism far outweighs optimism at this juncture. An editorial in the Independent calls on the United States to use its leverage on Israel’s government in order to help achieve a breakthrough.

The Financial Times and City AM both cover Jacob Frenkel’s decision to withdraw his candidacy as the next Governor of the Bank of Israel. Frenkel, who had previously held the position during the 1990s, was set to return for another stint and was widely considered a sound choice. However, what Frenkel described as an “avalanche” in the Israeli media over accusations of shoplifting in Hong Kong airport in 2006 prompted him to decide against holding the office again.

Meanwhile, in Syria, the capture of a key neighbourhood in Homs by President Assad’s forces and Hezbollah fighters is covered by the Times, Independent, Daily Mail and the online editions of the Financial Times and Telegraph. Homs has been a bastion of opposition strength and a key stronghold between the coast and the capital Damascus.

The Times online reports that in Egypt, the Muslim Brotherhood and its allies have called for a “million man march” to take place today in Cairo, in protest at the actions of the military which is accused of having killed several dozen protestors over the weekend who were calling for the restoration of Mohammed Morsi to power. The Guardian says there are fears that Egypt’s military authorities will re-introduce feared secret police units which were a feature of Hosni Mubarak’s rule. Meanwhile, the Financial Times online reports that European Union foreign affairs chief Catherine Ashton is in Egypt to try to broker a compromise between the military and Morsi supporters. In the Guardian, there is an analysis of the impact of changes in Egypt on the wider region, in particular the Gulf.

The front pages of all Israeli dailies this morning, including Yediot Ahronot, Maariv, Haaretz, Israel Hayom and Makor Rishon focus on Jacob Frenkel’s withdrawal of his candidacy as the next Governor of the Bank of Israel, which he revealed in an interview on Channel Two last night. In the commentary surrounding the announcement, Sever Plocker says in Yediot Ahronot that although the allegations of shoplifting are “personal persecution, a hunt, capitulation to violent populism,” Frenkel was nonetheless “not suited to be governor of the Bank of Israel in 2013.”However, in the same publication, Sima Kadmon questions why Frenkel has still not clarified what actually did happen at Hong Kong airport seven years ago, the source of the allegations against him.

The resumption of Israeli-Palestinian talks yesterday in Washington is also widely reported, especially in Haaretz, Makor Rishon and Yediot Ahronot, in which the headline speculates “Maybe this time.” In an interview on Israel Radio news, Justice Minister Tzipi Livni said that there is a chance of reaching an agreement and that giving up on an accord is not an option.