Hamas' political chief Khaled Meshal left Cairo last night following a visit thought to be connected to indirect talks on a deal for the release of captured Israel Defense Forces soldier Gilad Shalit.

Meshal left after talks with senior Egyptian intelligence officials and apparently also with senior officials in the Palestinian Authority.

His visit is believed to be connected to indirect talks being held in the Egyptian capital among representatives of Hamas, Israel and Egypt on a prisoner-exchange deal for Shalit's release.

Al Jazeera television reported that Meshal and other high-ranking Hamas figures, including his deputy Moussa Abu Marzouk, arrived in Cairo early yesterday morning. The Qatar-based station said the agenda included internal Palestinian matters.

Earlier yesterday the London-based Arabic daily Al-Hayat reported that the purpose of Meshal's Cairo visit was the talks with Israel. Meshal's appearance on the stage may point to some measure of progress in the negotiations and perhaps even an imminent decision over a prisoner-swap deal.

Up until now Hamas' military chief Ahmed al-Ja'abari had led the negotiating team for the organization.

Al-Hayat quoted Palestinian sources saying that Israeli negotiators were showing more flexibility than in the past over the release of Israeli Arabs and the number of prisoners who would be deported from the West Bank after their release.

However, senior Hamas official Osama Hamdan told Al-Hayat that Prime Minister Benjamin Netanyahu was still not prepared to pay the full, "reasonable" price needed to complete the agreement. In an interview with Filastin, a newspaper considered to be an organ of Hamas, Hamdan said Israel was showing great flexibility over Hamas' demands but added that the parties are not yet approaching agreement.

Most of the dispute now concerns the number of Palestinian prisoners Israel wants to deport after their release (thought to be about half of the 450 prisoners Hamas is demanding be released ) and the release of high-profile prisoners such as Marwan Barghouti, according to Al-Hayat.

According to the paper, the first and second round of recent talks were conducted with Ja'abari heading the Hamas delegation and senior Mossad official David Meidan leading the Israeli team.

Defense Minister Ehud Barak confirmed yesterday that there was "a grain of truth" to reports of the renewal of negotiations in Cairo but sounded a cautious note.

"Twice in the past five years there were genuine talks and they were not completed," he said, speaking to Israel's 103 FM radio yesterday. "I don't want to say more because it doesn't help. We need to maintain self-control and to hope very much. We all want to see Gilad Shalit at home."

Barak added that the Grad rocket fired at Be'er Sheva from the Gaza Strip on Monday night was the work of Islamic Jihad and not Hamas, with which Israel was holding indirect talks over a deal for Shalit's release.

Noam Shalit, Gilad's father, said yesterday he was not aware of any breakthrough in negotiations or any other encouraging news in connection to his son.

"There are reports all the time, and with regard to the defense minister's remarks you'll have to ask him. Hamas is constantly putting out reports from senior officials, and they have a lot of them," Noam Shalit said.

Shimshon Liebman, the head of the campaign to free Shalit, said yesterday that the Shalits and the campaign did not want to create false hope.

"With regard to the various reports and rumors, we have no additional information about what is in the newspapers," Liebman said. "We are very wary about nurturing hopes because many times we received an object lesson and learned that these were attempts that failed. We've been in this place before, where the defense minister confirms the existence of negotiations. We cannot allow ourselves the luxury of nurturing hopes."