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Israel's new Prime Minister Benjamin Netanyahu struck a conciliatory tone as he took office yesterday, promising to seek a "permanent arrangement" with the Palestinians and full peace with the entire Arab and Muslim world.

However, he did not explicitly endorse an independent Palestinian state - a key goal of the US and the international community.

"We do not wish to rule another people. We do not want to rule the Palestinians," he declared in a speech to parliament shortly before he was sworn into office.