20091227

JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu said on Sunday he would hold talks in Egypt on Tuesday with President Hosni Mubarak to seek ways to promote Middle East peacemaking.

"I believe we have an interest in moving the peace process forward in a variety of ways," Netanyahu told reporters at the start of the weekly cabinet meeting.

Netanyahu said he had requested the meeting with Mubarak after talks that Egypt's intelligence chief, Omar Suleiman, held in Israel last week.

"I intend to continue this important dialogue," he said.

Egypt and Germany are mediating a prisoner trade between Israel and Hamas under which the Islamist group, in charge of the Gaza Strip, would release captured soldier Gilad Shalit and Israel would free some 1,000 of the 11,000 Palestinians in its jails.

Two Gaza-based Hamas leaders, Mahmoud al-Zahar and Khalil al-Hayya, were headed on Tuesday to Syria via Egypt, a Hamas spokesman said. They planned to discuss with Damascus-based Hamas leaders Israel's response to a proposed swap.

Officials familiar with the negotiations said Israel has ruled out releasing a handful of Palestinian militants serving life sentences for orchestrating lethal attacks.

Israel, the officials said, was also intent on barring between 100 and 120 Palestinian prisoners from returning to the occupied West Bank, which is close to Israel's main cities, and wants them to be sent to Gaza or abroad.

"At this stage there is no deal and it is not clear to me whether there will be one," a participant in Sunday's cabinet meeting quoted Netanyahu as saying.