Howdy Lakshmi; There's a big difference between a permanent peace agreement (which is currently being negotiated by Israel and the PA), a temporary but formalized armistice agreement, a cease fire (hudna), and a "calm" (tahadiyeh). Hamas only offered a tahadiyeh to stop rocket fire in exchange for Israel halting "all forms of aggression" against the Gaza Strip by which they mean all military incursions including aerial surveillance and the economic blockade. Obviously, Israel decided that the proposed tahadiyeh had more disadvantages than advantages and rejected it. Hamas should realize that they are in no position to be making demands and if they offer a deal, then it had better include some incentive for Israel to go for it as opposed to the alternative of continuing the status quo. Hamas is on the ropes and is losing at a rate of 10 to 1. Why should Israel stop the pressure while Hamas refuses to accept the Quartet's conditions? Hamas will either bend or they will break.
Settlers from Esh Kodesh clash with Palestinians in the West Bank; IDF cordoned the area (Haaretz)
from the article: Ehud Olmert rejects Hamas' offer of cease-fire in Gaza Strip