JERUSALEM, May 7 (Xinhua) -- Israeli Prime Minister Ehud Olmert reiterated on Monday that the Jewish state will not accept the return of Palestinian refugees, a condition set by the Arab Peace Initiative.

    Olmert's remark was contained in a statement issued by his office after the premier's meeting with visiting German Foreign Minister Frank-Walter Steinmeier.

    According to the statement, Olmert "reiterated that Israel's unambiguous position is non-acceptance of the right of return as expressed in the Arab initiative".

    Olmert, however, viewed as positive the developments in the Arab world led by the moderate Arab countries, specially Saudi Arabia, because of their willingness to bring about a peace agreement that includes recognition of Israel.

    The prime minister also emphasized the central role of Saudi Arabia, which has great influence on the Palestinians and on the moderate Arab states, said the statement.

    The Arab Peace Initiative, first approved by the Arab League in its 2002 Beirut summit, calls for Israel's pullout from Arab land occupied in the 1967 Middle East War and the establishment of an independent Palestinian state in return for the normalization of ties with Arab states.

    Israel had rejected the initiative after it was first launched in 2002, but it has recently said it could provide a basis for talks though there are amendments to the refugee issue. Meanwhile, Olmert emphasized that Israel will respond severely to Palestinian militants' continued rocket firing at southern Israel, saying that "Israel cannot show restraint forever."

    A Qassam rocket fired from the Gaza Strip hit a house in the center of the southern Israeli town of Sderot early Monday morning, narrowly missing a kindergarten.