(Changes transliteration of man's name, adds Israel comment)
By Ezzat Baltaji
NAQOURA, Lebanon, June 1 Hezbollah said on Sunday it had released the remains of Israeli soldiers killed in a 2006 war with Israel, which handed over a Lebanese man who had completed a jail term on charges of spying for the group.
The exchange increased speculation of progress in indirect talks between Israel and Hezbollah, a powerful Shi'ite Islamist group, over a broader prisoner swap. Lebanese political sources said last Monday that the talks had made major progress.
Nissim Nisr, released after a six-year jail term, was greeted by Hezbollah officials in the southern village of Naqoura, where the group unexpectedly announced the release of the soldiers' remains.
"We today are handing over some of the remains of a number of Israeli soldiers who were killed in the July war and who the Israeli army left in Lebanon," Hezbollah security official Wafik Safa said upon Nisr's arrival.
A box was placed in a vehicle belonging to the International Committee of the Red Cross (ICRC) for delivery to Israel.
An Israeli military spokesman said the remains would be inspected by security forces and undergo forensic examination.
A panel had been appointed "that will be responsible for directly contacting the bereaved families whose soldiers' body parts are suspected to be among the remains transferred", the spokesman said.
Hezbollah leader Sayyed Hassan Nasrallah said in a Jan. 19 speech his group had the heads, hands and legs of soldiers left on the battlefields of the 34-day 2006 war.
The conflict was touched off by the group's capture of two soldiers during a raid into Israel. Hezbollah said it had captured the soldiers to negotiate the release of prisoners in Israel, including the long-held Samir Qantar.
"We are looking forward in the near future, the very near future, to the return of our prisoners ... at the forefront of them, the hero Samir Qantar," Hezbollah official Sheikh Nabil Qawouk said at a rally to mark Nisr's release.
Nasrallah last week reiterated his vow that all Lebanese prisoners, including Qantar, would be released soon.
Nisr, who had been held at Nitzan Prison in central Israel, arrived in Lebanon in an ICRC vehicle. Well-wishers threw rice and flowers at him as he entered his home village of Bazouriyeh.
"God willing, very soon, we will witness the return of the Lebanese prisoners," Nisr, wearing a Hezbollah scarf, said.
A Lebanese political source said Sunday's exchange "could not be separated" from negotiations to secure the broader prisoner swap, which would include the soldiers captured in a raid into Israel.
A U.N.-appointed mediator, believed to be a German intelligence officer, is seeking to negotiate an exchange.
Israel holds about 10 Lebanese, including Qantar. His release is widely seen as crucial to any deal. Hezbollah has refused to say whether the two soldiers are dead or alive.
German Foreign Minister Frank-Walter Steinmeier, on an official visit to Lebanon, said: "We are of course very pleased ...that a first exchange has taken place, a first step, I hope that this will usher in a positive dynamic that will lead to further results."
Nisr was born in Lebanon to a Jewish mother and a Muslim father. He was sentenced in Israel in 2002 after being convicted of spying for Hezbollah, an Iranian- and Syrian-backed group.
Qantar, 46, took part in a 1979 raid that killed two Israeli men and a four-year-old girl.
In October, Israel and Hezbollah exchanged the remains of an Israeli civilian for a captive Hezbollah fighter and the bodies of two other Lebanese guerrillas killed in the 2006 war. (Additional reporting by Angelika Stricker and Laila Bassam in Beirut; Dan Williams and Ari Rabinovitch in Jerusalem; Writing by Tom Perry in Beirut and Avida Landau in Jerusalem)