Wellington, New Zealand, Feb 27, SPA -- Prime Minister HelenClark's spokesman said Sunday that words of regret fromIsrael's president over a scandal involving suspectedIsraeli spies were encouraging, but that New Zealand hasyet to receive a formal apology. Relations between the two nations have been frosty sincetwo suspected Israeli agents were convicted and imprisonedin New Zealand for trying to fraudulently obtain a passportin 2004. New Zealand has demanded a public explanation and apologyfor what Clark described as "utterly unacceptable"behavior by the two, Uriel Zoshe Kelman and Eli Cara. They were deported last year after serving half of theirsix-month prison sentences. Police are still searching forseveral other people they believe were involved. Clark has slapped diplomatic sanctions on Israel,including delaying approval of the appointment of a newIsraeli ambassador. She also postponed foreign ministry consultations anddeclined to issue an invitation for Israel's PresidentMoshe Katsav to visit New Zealand. Katsav said on Australian television that he regretted thedeterioration of his country's relationship with NewZealand. "I am very sorry about the last development in ourrelations with New Zealand." Katsav said on Channel NineTelevision's Sunday program. "For us New Zealand is a goodfriend of Israel and I really regret about what happened." "But again, I really hope that this problem is closed andI want really to close this chapter in our relation withNew Zealand. I can express my (sorrow) and my regret," hesaid. Clark's spokesman said the comments were encouraging, andher government looked forward to making progress on thematter through diplomatic channels.--SPA1248 Local Time 0948 GMT www.spa.gov.sa/242693