Netanyahu says will visit Egypt on Tuesday

Israel's Prime Minister Benjamin Netanyahu speaks with cabinet secretary Zvi Hauser (R) during the weekly cabinet meeting in Jerusalem December 27, 2009.

JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu said on Sunday he would hold talks in Egypt on Tuesday with President Hosni Mubarak to seek ways to promote Middle East peacemaking.

"I believe we have an interest in moving the peace process forward in a variety of ways," Netanyahu told reporters at the start of the weekly cabinet meeting.

Netanyahu said he had requested the meeting with Mubarak after talks that Egypt's intelligence chief, Omar Suleiman, held in Israel last week.

"I intend to continue this important dialogue," he said.

Egypt and Germany are mediating a prisoner trade between Israel and Hamas under which the Islamist group, in charge of the Gaza Strip, would release captured soldier Gilad Shalit and Israel would free some 1,000 of the 11,000 Palestinians in its jails.

Two Gaza-based Hamas leaders, Mahmoud al-Zahar and Khalil al-Hayya, were headed on Tuesday to Syria via Egypt, a Hamas spokesman said. They planned to discuss with Damascus-based Hamas leaders Israel's response to a proposed swap.

Officials familiar with the negotiations said Israel has ruled out releasing a handful of Palestinian militants serving life sentences for orchestrating lethal attacks.

Israel, the officials said, was also intent on barring between 100 and 120 Palestinian prisoners from returning to the occupied West Bank, which is close to Israel's main cities, and wants them to be sent to Gaza or abroad.

"At this stage there is no deal and it is not clear to me whether there will be one," a participant in Sunday's cabinet meeting quoted Netanyahu as saying.

Netanyahu last visited Egypt in May, meeting Mubarak in the Red Sea resort of Sharm el-Sheikh, where the Israeli leader pledged to pursue talks with the Palestinians.

Israeli-Palestinian negotiations have been suspended for the past year.

Palestinian President Mahmoud Abbas has said talks could resume only if Israel halted all settlement construction on land it captured in the 1967 Arab-Israeli war. He has rejected as insufficient a limited moratorium on new building in West Bank settlements that Netanyahu imposed last month.

(Writing by Jeffrey Heller, Editing by Angus MacSwan)