Israel and the United States are discussing a new raft of sanctions that could be imposed on Iran if the next round of talks between world powers and Tehran fail, Israeli daily Haaretz reported on Monday.

U.S. Treasury Undersecretary David Cohen said in an interview with the newspaper the sanctions would be imposed if talks in Russia slated for mid-June failed to halt Iran's nuclear program.

Israel's prison service has offered to ease restrictions on Palestinian prisoners in a bid to end a mass hunger strike that has left several detainees close to death, sources told Agence France Presse on Thursday.

Just under 1,600 Palestinian prisoners are currently refusing food in a wide-ranging protest against solitary confinement, detention without charge and restrictions on family visits, education and various privileges.

Israeli Prime Minister Benjamin Netanyahu sought to sidestep strife in his right-wing coalition on Sunday by forming a committee to seek legal solutions to contested settlement projects.

The dispute centers on the government's policy on settlements in the occupied West Bank and its commitment to dismantle a number of unauthorized settler outposts in line with a supreme court ruling of August 2011.

Talks between Iran and six world powers in Istanbul on Tehran's nuclear program, the first in 15 months, began Saturday in a "positive atmosphere," a European Union spokesman said.

"There is a positive atmosphere. ... There is a desire for substantive progress," Michael Mann, spokesman for EU foreign policy chief Catherine Ashton, told reporters.

The Palestinian leadership on Thursday endorsed the latest agreement between the heads of Fatah and Hamas and called for preparations for elections to be speeded up.

Palestinian President and Fatah head Mahmoud Abbas and Hamas leader Khaled Meshaal inked an accord in Doha on Monday placing Abbas at the head of an interim government to supervise the run-up to elections later this year.

Palestinian President Mahmoud Abbas warned in an interview on Sunday that the international peacemaking Quartet will have "failed" if it cannot kickstart negotiations by January 26.

"If the Quartet can't get the Israeli and Palestinian sides to the table by January 26, it means they have failed and the Palestinian leadership will study its position and act accordingly," he told Palestine TV.

The deputy chief of Iran's armed forces warned on Wednesday that any attack by Israel would bring "destruction" of the Jewish state and that Iran's retaliation would be felt outside the Middle East as well.

Brigadier General Masoud Jazayeri stressed that the Israeli nuclear site of Dimona was "the most accessible" target, and that "our response would not be limited to the Middle East," according to an interview given to the Iranian Arabic-language channel al-Alam.

Vandals torched a mosque in northern Israel in a suspected revenge attack by right-wing extremists that sparked a "furious" response from Prime Minister Benjamin Netanyahu on Monday.

The mosque, located in the Bedouin village of Tuba Zangaria in the northern Galilee region, sustained heavy damage in the overnight attack, in which the arsonists scrawled the words "tag" and "revenge" on the walls.

Israeli officials called on Sunday for relations with Egypt to return to normal despite Friday's attack by a mob on Israel's embassy in Cairo.

"We shall do everything in order that relations between the two countries will return to normal," Environment Minister Gilad Erdan, considered close to Prime Minister Benjamin Netanyahu, told public radio.

Vandals graphitized a West Bank mosque, torched two Palestinian cars and uprooted olive trees overnight in attacks which locals on Thursday blamed on Jewish settlers.

The mosque in Yatma village some 10 kilometers south of Nablus was spray-painted with Hebrew graffiti reading "price tag" and "Migron" in reference to a settlement outpost where Israeli troops demolished three homes on Monday.