Prime Minister Ehud Olmert denied on Monday that Israel had reached a ceasefire agreement with Hamas and dismissed reports that there had been direct or indirect talks with the Palestinian movement.

Olmert’s denial came as Israel halted military pressure on Gaza and Hamas reduced the firing of crude rockets into Israel from 50 a day to three since last Friday.

Last week the government ordered the Israeli army to exercise restraint in operations in the Gaza Strip, pursuant to what a senior government official termed “new rules of the game”, formulated with the assistance of US Secretary of State Condoleezza Rice in the wake of the latest military operation in Gaza which left 129 Palestinians dead, more  than half of them civilians, and killed five Israelis, four soldiers and a civilian.  According to the “new rules,” Israel will not strike into Gaza as long as Hamas does not fire at Israel. However, the arrangement contradicts a cabinet decision to maintain the military pressure on Hamas.

This decision was set aside when Rice relayed a proposal for a lull that Hamas had transmitted to her via Egypt.

On her departure last Wednesday, Olmert stated, “If they don’t fire Qassams at us, we won’t attack in Gaza.”  While Hamas spokesman Sami Abu Zuhri agreed that no mutual ceasefire has been reached, he said Egypt would continue efforts to secure a comprehensive truce. Hamas will not be satisfied for long with a simple informal ceasefire.  The movement argues that Israel must cease all military operations against Gaza and in the West Bank and lift the siege and blockade of Gaza.  Hamas, insists that both Palestinian occupied territories must be covered by the ceasefire.