Hamas sources said on Thursday that its representatives had recently transferred a letter written in kidnapped soldier Gilad Shalit's own hand to his father, Noam Shalit.

The sources told Haaretz that a deputation from the political wing of Hamas in Damsacus is now in Cairo to discuss a prisoner swap. According to the sources, Hamas told the Egyptians its demands included the release of Palestinian minors and women and the heads of Palestinian organizations in Israeli jails, including Marwan Barghouti, as well as prisoners incarcerated since before the Oslo Accords.

Noam Shalit refused to comment on the report, but said he had so far received no real sign of life.

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Sources involved in the negotiations on Thursday denied a report in the London-based Al-Quds al-Arabi newspaper claiming that a deal had been reached. However, the sources said, there had been significant progress in the talks.

Spokesmen for some of the three groups involved in Shalit's June 25 abduction in a cross-border raid from Gaza also published statements denying the Al-Quds al-Arabi report Thursday.

According to Al-Quds al-Arabi, a deal was reached under which Shalit would be transferred to Egypt, after which Israel would release 840 Palestinian prisoners in two rounds: one at the end of this month, and one at the end of October. The paper said that the deal was finalized at a three-way meeting in Amman on Tuesday among Palestinian Authority Chairman Mahmoud Abbas, Egyptian intelligence chief Omar Suleiman and Shin Bet security service chief Yuval Diskin.

However, the paper also reported that Friday Israel would release 21 Hamas ministers and parliamentarians whom it arrested following Shalit's abduction, and whom a military court had ordered freed on Tuesday. This report has already proven false, since the military prosecution appealed the court's decision, and the appellate court agreed that the detainees should remain in jail until the appeal is heard, which could be as early as next week.

In its appeal, the military prosecution denied that the Hamas officials were arrested because they were PA parliamentarians or ministers. Rather, it said, they were arrested because they are leaders of an organization that engages in terrorism against Israelis. It also argued that the fact that these officials were PA parliament members should not grant them immunity from prosecution.