http://www.cbc.ca/world/story/2008/06/17/israel-hamas.html
Israel and the radical Palestinian group Hamas have agreed to observe a ceasefire from Thursday morning local time, Egypt's state-owned news agency said Tuesday.
A Hamas official in Gaza, speaking to the Associated Press on condition of anonymity, confirmed the truce.
Israeli officials declined to confirm a deal, but said they were "cautiously optimistic" and Israel's negotiator in the truce talks was rushing to Cairo.
Egypt's MENA agency cited an unnamed high-level Egyptian official as saying both sides "have agreed on the first phase" of an Egyptian package to end ongoing violence in the Gaza Strip.
The first phase is a "mutual and simultaneous calm" that will start early Thursday, MENA said.
The agreement is designed to end months of daily Palestinian rocket and mortar assaults on Israeli border towns and Israeli retaliation.
'A new reality' possible: Israel
Israeli government spokesman Mark Regev would not confirm or deny a deal.
"What is important is not only words, but deeds. If there is a total absence of terror attacks from Gaza into Israel and if there is an end to arms buildup in Gaza Strip … that will indeed be a new reality."
Gaza militants have been bombarding southern Israel with rockets and mortars for seven years. The rate of fire increased after Israel pulled its troops and settlers out of Gaza in 2005, and stepped up further last year after Hamas wrested power from forces loyal to Palestinian President Mahmoud Abbas.
Israel has responded with air and ground attacks that have killed hundreds of Palestinians, many civilians. It has also imposed a strict blockade on Gaza, letting in only limited amounts of humanitarian aid, restricting fuel supplies and widening already rampant unemployment.
Ending the economic sanctions by opening Gaza's crossings with Israel and Egypt has been a major Hamas demand in the ceasefire talks.
Previous accords – most recently, a November 2006 deal – have broken down fairly quickly.
Israel is suspicious of Hamas's motives, especially since the militant group rejects the Jewish state's right to exist and has declared it would take advantage of any lull to rearm.
But with the Israeli government under heavy domestic pressure to halt the rocket fire, the choices were a truce or a full invasion of Gaza. Last week, Israeli leaders decided to put off a large-scale military campaign to give truce efforts more time to succeed.
Previous large-scale offensives have failed to halt the militant attacks.