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Palestinian Prime Minister Ismail Haniyeh of Hamas said Monday that Fatah militant leader Marwan Barghouti does appear on the list of prisoners the Palestinians want freed by Israel in return for the release of an Israel Defense Forces soldier held captive since June.

Haniyeh's comments came after his deputy, Azzam al-Ahmad of Fatah, said earlier this week that Barghouti's name would not be included on the list presented to Israel.

Israel has said it will not free Barghouti, who is serving five consecutive life terms for his role in shooting attacks that killed five people - four Israelis and a Greek monk.

Hamas, meanwhile, issued a statement to reporters Monday in support of capturing IDF soldiers in order to use them as bargaining chips in negotiating the release of Palestinian prisoners.

"We believe that kidnapping soldiers and exchanging them for prisoners is the best solution for releasing our heroes, after the failure of all the diplomatic channels."

Fatah's armed wing also urged its members Monday to kidnap Israelis to swap them for Palestinians held in Israeli jails.

Blaming "the Israeli enemy" for the failure to release prisoners, a statement faxed to the media issued "an open call for all our fighters to concentrate on kidnapping Israeli soldiers and civilians."

Several thousand Palestinians gathered outside the Red Cross office in Gaza on Monday to call for the release of Palestinian prisoners held in Israeli prisons.

The Palestinians' annual Prisoners Day this year falls on Tuesday.

The rally came as negotiations continued for a prisoner swap in return for IDF soldier Gilad Shalit, who was captured by Hamas-linked militants last June. Shalit's captors have demanded the release of hundreds of Palestinians, including prisoners convicted for the murders of Israelis.

Haniyeh assured the crowd that the list of prisoners Hamas is demanding from Israel in return for Shalit includes "all our people from all the factions."

According to recent statistics from the human rights group B'Tselem, there are currently 9,250 Palestinians in Israeli jails.

One Gazan at the rally Monday was Nedal Sarifiti, 52, who said his son Ali is serving a 25-year sentence in Israel on charges of being a Fatah militant.

"I am optimistic that the day of freedom is coming," Sarifiti said.

Prime Minister Ehud Olmert has expressed disappointment over names on the list, but has not ruled out a deal.