Israel said its Gaza offensive could be "in the final act" today amid other signs that a ceasefire could be in the offing to end three weeks of fighting in which more than 1,100 Palestinians have been killed.
However, Israel rebuffed at least two elements of the truce conditions offered by Hamas, and again bombarded the Gaza Strip after a relative lull in the fighting with Islamist militants.
In Doha, Hamas's exiled leader Khaled Meshaal told Arab leaders his group would not accept Israeli ceasefire conditions and would fight on until Israel ended hostilities.
He urged participants at an Arab meeting on Gaza to cut all ties with the Jewish state, a call echoed by Syria and Iran.
Qatar and Mauritania later said they had frozen political and economic ties with Israel.In another sign of the anger the Gaza onslaught has provoked in the Muslim world, Turkish prime minister Tayyip Erdogan said Israel should be barred from UN headquarters for ignoring a UN ceasefire resolution.
The inauguration of new US president on Tuesday is seen by some as a deadline for Israel to bow to mounting international pressure and call off its attacks.
"Hopefully we're in the final act," prime minister Ehud Olmert's spokesman Mark Regev said of ceasefire efforts.
Mr Olmert, Palestinian president Mahmoud Abbas and Egyptian president Hosni Mubarak may sign an agreement as early as Sunday that could underpin a proposed truce, Western officials said.
It was not immediately clear what that agreement would entail, but the officials said it would likely include security arrangements for Gaza's borders with Egypt and Israel, which both want Mr Abbas's forces to reassert control at key crossings.
Israel refuses to deal directly with Hamas. Israeli political sources said the government was considering a unilateral ceasefire and withdrawal that would ignore Hamas's demands for an end to its punitive blockade of the enclave.
Israeli foreign minister Tzipi Livni, asked if Israel should end fighting unilaterally, told Channel 10 television: "The security cabinet will convene to make the decision."
UN Secretary General Ban Ki-moon, visiting the region, may attend any ceremony in Cairo, the Western officials said.
"It is time now to even think about a unilateral ceasefire," Mr Ban said in Ramallah before heading to Ankara.
Gazans savoured some respite a day after fierce combat that some had seen as a final Israeli push before a ceasefire.
But Israeli strikes intensified later in the day, killing 22 Gazans. Among them were fighters, including an Islamic Jihad commander in the southern town of Khan Younis, and civilians.
Israeli tank fire hit the home of a Hamas militant, killing his wife and five children, in the central Gaza Strip, medical officials said. The militant was not there at the time.
At least 15 rockets and mortar rounds landed in Israel from Gaza, the army said, wounding five civilians. Such attacks have dwindled during the war, which Israel launched on December 27th with the declared aim of crippling Hamas's rocket-firing capacity.
Ten Israeli soldiers and three civilians have been killed in the campaign.
Medics taking advantage of a "humanitarian pause" in Gaza said they had recovered 23 bodies from areas of the city hardest hit during Thursday's intense fighting.
Chanting crowds attended the funeral of a top Hamas leader, Saeed Seyyam, killed in an Israeli air strike along with nine other people. Seyyam was the interior minister in Gaza's unrecognised government and leader of 13,000 armed security men.
About 45,000 Gazans fleeing battle zones have taken refuge in U.N.-run schools in the enclave, UN officials said.
Reuters