CAIRO (Reuters) - Israel has softened its terms for a prisoner swap with Hamas and the two enemies are nearing a deal to exchange hundreds of Palestinian inmates for an Israeli soldier held in the Gaza Strip, officials said on Monday.
A delegation from Hamas, the Islamist group that controls the Gaza Strip, crossed into Egypt for a planned meeting with Egyptian security officials in Cairo to discuss the deal that Egypt and Germany have been mediating.
Officials close to the talks said Israel had agreed to include in the exchange for the soldier, Gilad Shalit, some 160 prisoners whose release it had previously vetoed.
Shalit was captured by Palestinian militants who tunnelled into Israel from the Gaza Strip in 2006. Israel has linked any major easing of its blockade on the territory to the soldier's return home.
"The Shalit episode is about to be closed," one of the officials said.
Sources on both sides told Reuters there were hopes that a deal might be struck by the end of the week, when the Muslim festival of Eid al-Adha begins.
In Jerusalem, Israeli government officials declined to comment on prospects for a deal with Hamas, a group that has rejected Western demands to recognise Israel, renounce violence and accept existing interim Israeli-Palestinian peace accords.
"The efforts to win Gilad Shalit's release are continuing and taking place outside the media spotlight. We have no intention of commenting beyond this," Israeli Prime Minister Benjamin Netanyahu's office said in a statement.
Sources close to the negotiations have said Hamas, in the first part of a deal, would hand over Shalit to Egypt and Israel would release some 350 to 450 prisoners.
In a sign of flexibility from Hamas, the sources said, the group had agreed that some would go into exile rather than return to the West Bank or Gaza Strip.
More prisoners would be released when Shalit was transferred from Egypt to Israel, while other prisoner releases could take several more weeks to complete.
Officials who reported that a deal is approaching said Arabs holding Israeli citizenship are among the 160 newly agreed prisoners slated for release. Israel had objected to including Israeli Arabs in an exchange.
Public pressure has been mounting on the Israeli government to show flexibility in a prisoner swap, even if it meant freeing militants jailed for planning some of the most deadly Palestinian suicide bombings in Israel.
Amid the mounting speculation that a deal is near, Shalit's parents met on Monday Israel's chief negotiator in the indirect contacts with Hamas.
On Oct. 2, Israel freed 20 Palestinian women in return for a "proof-of-life" video showing the 23-year-old Shalit.
(Additional reporting by Nidal al-Mughrabi in Gaza and Jerusalem bureaux, Editing by Robin Pomeroy)
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