As mediator Omar Suleiman completed his talks, militants fired a rocket from Gaza that struck a house in an Israeli village, killing a 75-year-old woman, the military and rescue services said. Islamic Jihad said it fired rockets at the time of the fatal attack.
The rocket hit a house in the village of Yesha, 9 miles from Gaza, farther away than the usual targets of rockets fired by Gaza militants.
Suleiman's meetings with Israeli Prime Minister Ehud Olmert and other top leaders were aimed at wrapping up a cease-fire between Israel's military and Palestinian gunmen in Gaza. Israeli troops regularly clash there with militants who fire rockets at Israeli towns and attack border patrols. The crude rockets and mortar attacks have killed 15 people since late 2001.
Suleiman, a central figure behind the scenes in the Egyptian regime who serves as a top-level envoy for President Hosni Mubarak, told reporters that he had "high expectations" for the visit. But he made little apparent progress.
The Egyptians have been trying to close a deal for months between Israel and Hamas, the Islamic group that took over Gaza last June, and chances of success remained uncertain. Officially, Israel says it isn't negotiating with Hamas at all.
The proposed cease-fire would be for six months. It would cover only the Gaza Strip, after Hamas dropped an earlier demand that it include the West Bank as well.
Israel fears that Hamas will only use a lull in fighting to rearm, strengthen its rule and prepare for another round of fighting. Hamas officials have acknowledged this is one of their goals.
A central hitch in a potential deal is the fate of Cpl. Gilad Schalit, an Israeli soldier captured by Hamas militants in a cross-border raid in June 2006, and held in Gaza since then. Talks on a prisoner swap have stalled over disagreements about which prisoners Israel would release in return. Hamas wants hundreds of Palestinian prisoners, including people convicted of murder, to be freed.
Meeting with the Egyptian envoy Monday, Israel's leaders explicitly linked the cease-fire to Schalit, telling Suleiman there would be no truce if the soldier remained a prisoner.
Schalit is "an integral element of the situation," Olmert spokesman Mark Regev said. "Hamas cannot expect Israel to sit by idly when they are holding a young serviceman hostage now for almost two years."
Noam Schalit, the soldier's father, insisted that any deal include his son.
"I cannot imagine that the state of Israel would agree to any kind of arrangement or understandings without Gilad being freed," he told Israel Radio.
Hamas officials said Israel was trying to torpedo the possibility of a truce. "Any new conditions are an attempt to sabotage (Suleiman's) efforts," Hamas spokesman Sami Abu Zuhri said.
Suleiman did not endorse the Israeli condition, saying only "indirect negotiations" between Israel and Schalit's captors would continue.
If Hamas wants Israel to call off its military operations, the Israeli officials told Suleiman, Hamas must not only halt its attacks but also the arms smuggling that has allowed the group to turn itself from a ragtag militia into a well-armed force.
Olmert asked Suleiman for an Egyptian guarantee that no arms would be smuggled through the Gaza-Egypt border, the central conduit for weapons and contraband goods entering the territory, an official in Olmert's office said.
Hamas wants Israel to open Gaza's border crossings as part of a truce. Israel says that won't happen, but Regev said if a de facto truce is achieved it "could be the beginning of a more positive dynamic" that could change Israel's policy on the crossings.
Defense Minister Ehud Barak told Suleiman that if Hamas doesn't halt its fire, "Israel will be forced to act in a broader fashion," implying a large-scale military operation.
Mahmoud Zahar, a Hamas leader in Gaza, said his group was waiting for Israel's response. "We hope that logic will guide the Israeli side and lead them to stop their aggression and their escalation and to end the siege," Zahar said.
Islamic Jihad, the group behind Monday's rocket attack, has said it will not formally sign on to any cease-fire. But one of the group's leaders, Nafez Azzam, said Monday the group "has agreed to give the Egyptian efforts a chance."
Gaza has been virtually sealed by Israel and Egypt since the seizure of the territory by Hamas, a group that Israel and the U.S. consider a terrorist organization. The blockade has increased economic hardship for the 1.4 million residents of the impoverished territory.
Gaza now suffers from widespread shortages of fuel, electricity and many basic goods, unemployment has skyrocketed and with few exceptions, people have been prevented from leaving to work, visit relatives or seek medical care abroad.
Gaza officials shut down the territory's only power plant on Saturday, though it was not clear whether it actually ran out of fuel or whether Hamas was trying to exaggerate the impression of crisis. Israel resumed its supply Monday, and Kanan Obeid, a Gaza energy official, said the plant would resume operation.
