Israel open to civilian return to north Gaza in truce talks

JERUSALEM (Reuters) - Israel signalled openness on Sunday to allowing the return of Palestinians displaced from the northern Gaza Strip as part of truce talks, an apparent accommodation of a core Hamas demand.

The warring sides have stepped up negotiations, mediated by Qatar and Egypt, on a six-week suspension of Israel's offensive in return for the proposed release of 40 of the 130 hostages still held by the Palestinian militant group in Gaza.

Hamas has sought to parlay any deal into an end to the fighting and withdrawal of Israeli forces. Israel has ruled this out, saying it would eventually resume efforts to dismantle the governance and military capabilities of Hamas.

Hamas also wants hundreds of thousands of Palestinians who fled Gaza City and surrounding areas southward during the first stage of the almost six-month-old war to be allowed back north.

Israel initially refused to do so. But that position has softened, an Israeli official briefed on the Doha talks said.

"We are now willing to discuss a return of some of the displaced," the official told Reuters, without elaborating on numbers. Israeli media have speculated that the offer would be limited to women and children, to bar gunmen trying to reinforce those the Israeli military is still battling in parts of Gaza City.

The official, who requested anonymity, said Israel has also agreed in principle to release between 700 and 800 Palestinian prisoners in return for the 40 hostages.

That appeared to meet a demand of a Hamas proposal, reported by Reuters on March 15, for between 700 and 1,000 prisoners to be released.

The Israeli official cautioned, however, that any final decision would hinge on how many of the prisoners were senior militants serving long sentences for lethal attacks.

(Writing by Dan Williams; Editing by Ros Russell)