An Israeli official said Prime Minister Binyamin Netanyahu agreed to negotiate based on 1967 borders while keeping major West Bank settlements under Israeli control, Kuwaiti news service KUNA reported. The source said Netanyahu met Tuesday with Egyptian President Hosni Mubarak, a key figure in the Middle East peace talks.
Netanyahu's office, however, said the source's statements didn't reflect the Israeli prime minister's position, KUNA said.
Israel two months ago agreed to freeze construction activity in the West Bank, a move met with displeasure by the Palestinians, who want an end to the building and a timeline for negotiations.
Meanwhile, Hamas officials said its leaders will continue negotiating with Israel on a prisoner exchange, indicating the main unresolved issue involves four prominent prisoners held by Israel, The Jerusalem Post reported. Officials have been trying to negotiate an exchange so Israeli soldier Gilad Shalit could be freed after three years of captivity following his capture in a cross-border raid.
Officials told the Post Hamas has rejected Israel's demand to deport more than 140 prisoners after their release.
"The door has not been closed to a deal over the release of Gilad Shalit," said Mahmoud Zahar, a member of Hamas's negotiating team. "Hamas has reservations (about the latest Israeli offer), but its leadership will continue to negotiate."