A Palestinian official close to United Nations and Egyptian-mediated negotiations told Reuters on Sunday that Israel and militant groups in Gaza had agreed a truce, as cross-border violence abated.
The latest upsurge in fighting began four days ago when militants from the Hamas group, which rules the Gaza Strip, fired an anti-tank rocket at an Israeli school bus, critically wounding a teenager.
Israel's retaliatory air strikes have claimed the lives of 19 Palestinians, while militants have continued firing rockets from Gaza into Israel.
However, no Israeli air strikes were reported on Sunday. Israeli police and military officials said around 10 missiles had been fired from Gaza, a significant fall from the 130 of the previous two days.
"Palestinian factions have agreed to halt rocket fire and Israel agreed to cease attacks on the Gaza Strip," the Palestinian official said.
There was no official confirmation from either side, but a senior Israeli official told Reuters: "We will judge the other side over the next few days. The extent to which Hamas controls the other militant groups will affect the way we choose to act."
"What happens from here on is up to the other side," the official told reporters in Tel Aviv, speaking on condition of anonymity. "It seems calmer now, but it is still not clear where this is going."
Hamas' official website said that the ceasefire had been in place since Sunday morning. The ten rockets that landed in Israel on Sunday Palestinians blamed on those who disagreed with the ceasefire.
Israel refused to confirm or deny the report of a ceasefire. A senior security official said in response that "Hamas' ability to impose its authority on other groups in Gaza will be tested."
Earlier on Sunday, Hamas made a rare direct appeal to the Israeli public to halt the current round of cross-border fighting.
"We are interested in calm but want the Israeli military to stop its operations," Hamas Deputy Foreign Minister Ghazi Hamad said in an interview on Israel Radio, adding that the group would cease its rocket attacks if Israel halted its military operations against Gaza militants.
In Cairo, the Arab League accused Israel of brutal aggression in Gaza and called on the United Nations to impose a no-fly zone and lift Israel's partial blockade of the territory.
Prime Minister Benjamin Netanyahu warned on Sunday that if "Hamas intensifies their attacks, we will also intensify our force and our response will be much more severe."
The message came hours after the cabinet voted to continue to "work against terrorism in Gaza" in order to halt all rocket fire.
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