Security issues once again dominated talks and divided the two sides.
Israeli Prime Minister Ariel Sharon Sharon complained the Palestinian Authority had taken “little action to prevent terror” while Palestinian Prime Minister Ahmed Qurie left saying the summit “did not meet our expectations”.
While the two sides did manage to agree on many issues in principle, neither believed enough has been done by the other to express total commitment.
In a speech after the summit, Mr Sharon demanded a “total end to terrorism” for progress on the internationally drafted peace plan known as the roadmap which targets the creation of a Palestinian state alongside a secure Israel.
Israel offered to transfer security control to the Palestinians in the West Bank towns of Bethlehem and Qalqilya on the condition action was taken against Palestinians militants.
Mr Sharon also offered a number of other gestures, allowing 26,000 Palestinian labourers and 13,000 merchants into Israel to work each day and keeping crossings between Israel and Gaza open for longer hours.
The Palestinians continued to lobby for the reopening of air and sea ports, freedom of travel throughout the West Bank and for further releases of prisoners from Israeli jails.
Even as the summit began, Palestinian witnesses said an unmanned Israeli plane fired two missiles in the northern Gaza Strip without causing injuries.
The conference was held a day after Palestinian gunmen killed a Jewish settler in the West Bank and Israeli soldiers shot dead a Palestinian civilian in a restricted area in the Gaza Strip, incidents that further frayed a four-month-old cease-fire.
In a sign of impatience with Mr Abbas over his refusal to meet Israeli demands to disarm militants, Israeli forces detained dozens of men they claimed were members of the radical Islamic Jihad group.
The operation was the biggest West Bank raid since he and Mr Sharon declared the truce at a February 8 summit in Egypt.
“We will not allow a situation whereby disengagement is carried out under fire,” Mr Sharon said. “We will not stop the disengagement – we will stop the terror.”
Mr Abbas, whose January election to succeed the late Yasser Arafat revived peace hopes, says he wants to co-opt gunmen into Palestinian security forces and their groups into mainstream politics rather than risk confrontation and possible civil war.
“I feel as though you are punishing us because there is terror, as though I am responsible for this terror, as though I carry it out,” an Israeli official quoted Mr Abbas as telling Mr Sharon.
“You don’t give me anything because there is terror and in that you are in essence hurting me. You make me weak.”
Mr Abbas also wants Israel to free more of the 8,000 Palestinians in its jails, including long-serving inmates. The issue, raised at the summit, is highly emotive for Palestinians.
Mr Sharon was reported to have told Mr Abbas that Palestinian security forces must first act against militants before any negotiations on releasing prisoners.
Israel has freed 900 prisoners since the truce was declared.
Islamic Jihad said attacks it has carried out against Israelis since the cease-fire were in response to recent Israeli raids in the West Bank against several of its men.
It was the first time Mr Sharon and Mr Abbas had met in Jerusalem, the city claimed by Israel as its exclusive capital despite Palestinian objections.