Israel and Hamas look to end Gaza flare-up

GAZA (Reuters) - A Palestinian official close to U.N.- and Egyptian-mediated negotiations told Reuters on Sunday that Israel and militant groups in Gaza had agreed a truce, as cross-border violence abated.

The latest upsurge in fighting began four days ago when militants from the Hamas group, which rules the Gaza Strip, fired an anti-tank rocket at an Israeli school bus, critically wounding a teenager.

Israel's retaliatory air strikes have claimed the lives of 19 Palestinians, while militants have continued firing rockets from Gaza into Israel.

However, no Israeli air strikes were reported on Sunday. Israeli police and military officials said around 10 missiles had been fired from Gaza, a significant fall from the 130 of the previous two days.

"Palestinian factions have agreed to halt rocket fire and Israel agreed to cease attacks on the Gaza Strip," the Palestinian official said.

There was no official confirmation from either side, but a senior Israeli official told Reuters: "We will judge the other side over the next few days. The extent to which Hamas controls the other militant groups will affect the way we choose to act."

"What happens from here on is up to the other side," the official told reporters in Tel Aviv, speaking on condition of anonymity. "It seems calmer now, but it is still not clear where this is going."

"CALM WILL BE MET WITH CALM"

Hamas said it too did not want a further escalation but stopped short of saying it had agreed to a truce.

"If the Israeli aggression stopped, it would be natural for calm to be restored," Hamas spokesman Sami Abu Zuhri told Reuters. "Calm will be met with calm."

In Cairo, the Arab League accused Israel of brutal aggression in Gaza and called on the United Nations to impose a no-fly zone and lift Israel's partial blockade of the territory.

Hamas seized control of the Gaza Strip in 2007 from forces loyal to Palestinian President Mahmoud Abbas in a brief war. Israel maintains tight controls over the entry and exit of people and goods from the Strip, home to 1.5 million people.

The fighting has stoked fears of a wider conflict and possibly an Israeli ground incursion in Gaza reminiscent of the war in 2008.

Political analysts have explained the conflagration as an effort by Hamas to divert attention from demands, fueled by pro-democracy unrest in the Arab world, for an end to its split with the Western-backed Fatah movement in the West Bank.

Abu Ahmed, a spokesman for the Gaza militant group Islamic Jihad, said in a statement that it had "agreed to the Arab and European proposal for calm for the sake of the interests of our people," but would respond to further Israeli attacks.

Israeli Defense Minister Ehud Barak told Israel Radio that Hamas had already been hit hard.

"If they stop firing on our communities, we will stop firing. If they stop firing in general, it will be quiet, it will be good."

Israeli Prime Minister Benjamin Netanyahu said his security cabinet, a forum of senior ministers, had ordered the military to act according to the situation on the ground.

"The cabinet has instructed the Israel Defense Forces (IDF) to do all that is required to bring about an end to the firing and to restore calm to the south of the country. If the firing will continue the reaction will be much more severe," he said.

(Additional reporting by Maayan Lubell, Ari Rabinovitch, Allyn Fisher-Ilan and Ori Lewis; Editing by Kevin Liffey)