Palestinian officials have presented a detailed plan to Israel for the deployment of Gaza security forces to halt attacks on Israelis as the militant Hamas group set its terms for a ceasefire.
"We are ready to deploy at any time and are awaiting Israel's response to the plan saying we can take up specified positions," a senior Palestinian security source said after Israeli top army brass met Palestinian counterparts in Gaza.
A new spirit of cooperation could help revive peace hopes stirred by the January 9th election of Mr Mahmoud Abbas to succeed the late Yasser Arafat as president on a platform of ending more than four years of bloodshed.
"We believe in peace and negotiations and we want through negotiations to achieve peace," Mr Abbas said in a speech for the Muslim holiday of Eid al-Adha.
Aides to Mr Abbas said he had discussed with militant leaders this week the need for restraint to help ensure Israel pulls Jewish settlers out of Gaza this year as planned - a step it says it will not take "under fire".
In what could be an initial sign of progress in Mr Abbas's bid to achieve calm, there have been no launchings since Tuesday of mortar bombs and rockets that have rained down daily on Israeli troops and settlers in Gaza and frequently on southern Israel.
Setting terms for a truce, Mr Mahmoud al-Zahar, a Hamas leader, told a Gaza prayer meeting Israel must halt all military activity in the territory, including over flights, abandon checkpoints and free Palestinian prisoners.
Hamas has said any ceasefire with Israel must be based on mutuality, but Mr Zahar's statement was the clearest sign yet the group was considering Mr Abbas's call for non-violence.
"I sense we are on the verge of some sort of (truce) but we mustn't be surprised by anything in this war zone," said a senior Israeli military official.
Israel says it will not enter into any formal truce with Hamas, which is dedicated to its destruction, or other militant groups but would respond in kind if attacks on Israelis stopped.
In fresh violence in the West Bank, Israeli soldiers killed a 14-year-old Palestinian who witnesses said had joined other youths in throwing stones at the troops.
In an indication the ice was breaking between Israel and Mr Abbas, Prime Minister Ariel Sharon yesterday lifted a ban on contacts with the Palestinian Authority that he imposed in response to a deadly bombing last week.
Mr Sharon softened his position after receiving information from intelligence sources that Hamas was starting to cooperate with the Palestinian Authority, a political source said. Hamas boycotted the election.
But Mr Sharon's office said initial contacts would involve only security officials until "Palestinians take real steps to stop terrorist operations" and rocket and mortar fire.