(Replacing "attend" with "participate" in quote in paragraph 6)
* IMF, EBRD, World Bank all plan presence in Bahrain
* Palestinians to shun June 25-26 meeting, seeing pro-Israel bias
* U.S. hopes meeting is prelude to its Mideast peace plan rollout
* Iran berates Bahrain, Saudi Arabia for "stepping into quagmire"
By Rami Ayyub
JERUSALEM, June 5 (Reuters) - Global financial bodies including the International Monetary Fund (IMF) and World Bank plan to be present at a U.S.-led conference on the Palestinian economy this month that the Trump administration has cast as an overture to its peace plan.
The efficacy of the June 25-26 meeting in Bahrain has been in doubt since Palestinian leaders and businesspeople decided to shun it over Washington's perceived pro-Israel bias and inattention to their political demands.
Israel's new election, an upsurge in cross-border fighting and the Palestinians' resentment at U.S. recognition of Jerusalem as Israel's capital add to the complicated backdrop.
However, the IMF, which has been operating in the West Bank and Gaza since 1995, confirmed it and other institutions would be present in Bahrain's capital Manama.
"The IMF has been invited to the meeting and expects to attend, along with other international financial institutions," a representative said.
The European Bank for Reconstruction and Development (EBRD) confirmed it would have "someone" representing it. A World Bank spokesman said it had an invitation "and expects to participate".
Lenders and development banks have long played a stabilising role in the Israeli-Palestinian conflict, providing loans, credit guarantees, and policy advice to the Western-backed Palestinian Authority (PA).
White House senior adviser Jared Kushner this week concluded a trip to the Middle East and Europe aimed partly at drumming up support for the "Peace for Prosperity" conference intended to unveil the economic part of Trump's long-heralded peace plan.
PALESTINIAN OBJECTIONS
But Palestinian and Arab officials suspect the event may be a prelude to a U.S. push to jettison the "two-state" solution - a long-standing, international formula for an independent Palestinian state alongside Israel in the West Bank, East Jerusalem and Gaza.
The twin state blueprint has been the basis for decades of lending and technical support from global financial institutions, aimed at building the capacity of Palestinian government ministries and the private sector.
Though Saudi Arabia and the United Arab Emirates plan to attend the Bahrain conference, they have assured the Palestinians they would not endorse a U.S. plan that fails to meet their main demands.