Israeli army and Gaza militants in uneasy lull

By Jeffrey Heller

JERUSALEM (Reuters) - Israel and Hamas Islamists who control the Gaza Strip have both been holding their fire across the tense border as Egypt tries to mediate a truce, officials from both sides said on Monday.

Israeli Prime Minister Ehud Olmert denied any agreement to halt military action against militants in the coastal enclave, but Palestinian President Mahmoud Abbas said he believed Israel would go along with a deal.

Abbas said Hamas and Islamic Jihad, the main groups in Gaza behind cross-border rocket fire at Israel, want assurances their leaders will not be attacked by the Jewish state.

A Gaza truce sought by the Palestinian president could be key to U.S.-brokered peace efforts but likewise benefit Hamas, which seized the coastal enclave in June after routing Abbas's more secular Fatah forces.

Israel has not struck in the Gaza Strip since Thursday, three days after it ended an offensive that killed 120 Palestinians.

The number of Palestinian rocket attacks on southern Israel has also dropped sharply since Olmert said last Wednesday Israeli forces would have no reason to attack Gaza if the daily salvoes stopped.

Hamas's armed wing has not itself claimed responsibility for firing any rockets since Israel wrapped up its ground and air assault. In the absence of Israeli "aggression", Hamas official Sami Abu Zuhri said the group had no cause to launch them.

"It seems that Hamas has decided for now not to shoot. And we're not shooting either," said an Israeli official, who declined to be named because of the sensitivity of the issue.

"This could well become a ceasefire. But the ball is in Hamas's court," the official said.

In new public comments on the lull, Olmert insisted Israel was not negotiating with Hamas "directly or indirectly". But in a nod to a possible de facto truce, he repeated that if rockets were not fired at Israel, "we will have no reason to shoot".

Speaking in Amman, Abbas said: "Hamas and Islamic Jihad have asked that their leaders should be protected from Israeli (attack). I think the Israelis are agreeing to this or have agreed. We may be hearing about this deal in the coming few days."

Israel, the United States and the European Union refuse to talk with Hamas, which opposes the peace talks, until it recognizes Israel and renounces violence.

BLOODSHED

The recent fighting along the Israel-Gaza frontier and longer-range rocket salvoes that hit a major southern Israeli city had threatened to derail the statehood talks.

In protest at the bloodshed in Gaza, Abbas briefly suspended the negotiations. They are due to resume later this week.