Western powers have voiced outrage over what they see as an unacceptably high Palestinian civilian death toll and humanitarian crisis in Gaza arising from Israel's military onslaught to destroy Hamas in tiny, densely populated Gaza.
Israel and Hamas sent teams to Egypt on Sunday after the arrival on Saturday of CIA Director William Burns, whose presence underlined rising U.S. pressure for a deal that would free hostages held in Gaza and get aid to stricken civilians.
"There is no change in the position of the occupation and therefore, there is nothing new in the Cairo talks," the Hamas official, who asked not to be named, told Reuters. "There is no progress yet."
Earlier on Monday, Egypt's state-affiliated Al-Qahera News TV channel quoted a senior Egyptian source as saying progress had been made after a deal was reached among participating delegations on issues under discussion.
Six months into its offensive against Palestinian Islamist movement Hamas that has devastated Gaza and left most of its 2.3 million people homeless and many facing famine, Israel also voiced cautious optimism about the latest mediated negotiations.
In Jerusalem at the weekend, Israeli Foreign Minister Israel Katz described the Cairo talks as the closest the sides have come to a deal since a November truce under which Hamas freed dozens of hostages.
"We have reached a critical point in the negotiations. If it works out, then a large number of hostages will come home," he told Israel's Army Radio.
Hamas seized 253 people during an Oct. 7, cross-border killing spree in southern Israel that sparked the war. Of those, 129 hostages remain, and negotiators have spoken of around 40 going free in the first stage of a prospective deal with Hamas.
Two Egyptian security sources and Al-Qahera News said progress had been made in the Cairo talks.
The security sources said that both sides had made concessions that could help pave the way for a ceasefire deal in parallel meetings with mediators on Sunday.
The concessions related to the release of Israeli hostages held by Hamas, and the Palestinian militant group's demand for the return of displaced residents to northern Gaza, they added, without giving further details.
Consultations were expected to continue within the next 48 hours, Al-Qahera reported.
NOT FLEXIBLE ON MAIN DEMANDS, HAMAS SAYS
A Palestinian official close to mediation efforts told Reuters that deadlock continued to reign over Israel's refusal to end the war, withdraw its forces from Gaza, allow hundreds of thousands of displaced civilians to return to their homes and lift a 17-year-old blockade to allow speedy reconstruction.
These steps take precedence over Israel's prime demand for a release of hostages in exchange for Palestinians held in Israeli prisons, said the official, speaking on condition of anonymity.
"Regarding the exchange of prisoners, Hamas was and is willing to be more flexible, but there is no flexibility over our...main demands," he told Reuters.
Israel has ruled out winding up the war shortly or withdrawing from Gaza, saying its forces will not relent until Hamas no longer controls Gaza or threatens Israel militarily.
Prime Minister Benjamin Netanyahu said Israel would not give in to "extreme" Hamas demands.
But Israeli officials have signalled willingness to allow some Palestinians displaced from northern Gaza to return there.
Hamas killed 1,200 people in its rampage into southern Israel on Oct. 7, according to Israeli tallies. More than 33,100 Gaza Palestinians have been killed in the Israeli response, according to the health ministry in Gaza. More than 600 Israeli soldiers have been killed in Gaza combat, the army says.
Under international pressure to ease Gaza's humanitarian crisis and not follow through on plans to storm Rafah, a southern town packed with a million displaced people, Israel said on Sunday it had pulled more soldiers from southern Gaza.
This left just one brigade there, but Defence Minister Yoav Gallant said the troops would be preparing for future military operations, including "their coming mission in the Rafah area".
A day after Israeli forces retreated from the heart of residential areas of the southern city of Khan Younis after months of bombardment and raids, Palestinian medics said they recovered eight more bodies of people killed by Israeli gunfire. They had retrieved 12 bodies from the rubble the day before.
But a few miles to the south hard up on the border with Egypt, residents of Rafah, the last Palestinian refuge from Israeli ground forces, said Israel carried out at least five airstrikes on parts of the city, causing a number of injuries.
(Reporting by Nidal al-Mughrabi, Ahmed Mohamed Hassan, Dan Williams and Aidan Lewis; editing by Mark Heinrich)
By Nidal al-Mughrabi and Ahmed Mohamed Hassan
