"We haven't yet reached an agreement, but there are intensive efforts exerted in this respect, where there are many issues that need more discussion, understanding and agreement," said Abu Rudeineh.

Earlier reports said that both Abbas and Haneya had agreed to form a national unity government that ends the ongoing economical and political crisis the Palestinians have been going through over the past nine months.

"I believe there is a necessity to form a national unity government of Palestinian professionals (technocrats), where there is an agreement in principle to form such kind of a government," said Abu Rudeineh.

However, he said "there are some details and some issues that need more discussion and more understanding. We must agree on these issues and details in order to reach an agreement at the end."

Neither President Mahmoud Abbas nor Prime Minister Haneya spoke to reporters, but mediator between the two, lawmaker Mustafa al-Barghouti told reporters that "the meeting is excellent and positive."

"It was agreed to resume contacts and meetings within the coming few days until all details and issues are agreed upon," said al-Barghouti, adding "the gaps were narrowed, but there are some details need to be discussed."

Meanwhile, Palestinian hospital sources said on Monday evening that bodies of two militants were found near Gaza-Israel border in eastern Gaza Strip while the Israeli military operation continued.

The two militants were shot dead by the Israeli army in early morning, and the Palestinians only confirmed their death after the Israeli army allowed Palestinian ambulances to the area.

In the Autumn Clouds military operation, the biggest since Israel pulled out from Gaza and focused in northern Gaza, tanks and bulldozers, backed by helicopter gunships, rolled into Beit Hanoun and Palestinian communities near the borders in northern Gaza.

At least 56 Palestinians have so far been killed in the operation, which, starting on Wednesday last week, was part of an offensive unleashed in June following the capture of an Israeli soldier by Palestinian militant groups.

The captors holding the Israeli Corporal Gilad Shalit hostage in Gaza had threatened to kill Shalit if the Jewish state kept on striking the Palestinian territories.

Israeli officials had declared that the operation was aiming at halting Qassam rocket fire on southern Israel.

The fighter was identified as Nader Abu Al Omaren, member of the Al Aqsa brigades, the armed wing of Fateh movement. Four Palestinians were injured, one seriously.

Earlier on Tuesday morning, three Palestinians were killed and several others were injured when the Israeli army shelled the house of Palestinian legislative Council member Jameela Al Shanti, east of the Jabalia refugee camp, in the Gaza Strip.

Eyewitnesses reported that an Israeli helicopter fired two missiles at the house of Al Shanti completely destroying it and killing three Palestinians, including one women. Al Shanty was not at home when her house was shelled.

The casualties were identified as Nahla Al Shanty, 40, and members of the Al Qassam brigades, the armed wing of Hamas Mahmoud Abu Jabal, 23, and Abdul-Majeed Al Gharbawi, 40.

Al Shanty was one of the organizers of Last Friday's protest of women when dozens of women marched towards a mosque where dozens of fighters were surrounded by the army; the women managed to smuggle the fighters out of the mosque. Two women were killed and seven were injured when the army opened fire at them during the protest.

Also on Tuesday, two fighters of the Al Quds brigades, the armed wing of the Islamic Jihad, were killed by Israeli military fire in Beit Lahia, in the northern part of the Gaza Strip.

Local sources reported that the fighters exchanged fire with under-cover units of the Israeli army who were topping on of the houses in the town.

The two fighters were identified as Hamdi Al Batsh, 21, from Beit Lahia, and Raed Mohammad Al Qarm, 22, from Al Shaty' refugee camp.

On Tuesday at dawn, Israeli forces evacuated from Beit Hanoun but remained stationed around it ending an operation Israeli called "Autumn Clouds". At least 59 Palestinians were killed and 250 - 300 were injured, 40 seriously; among the injured were children, women and elderly.

The operation also caused massive destruction to private and public constructions.

An Israeli military spokesman commented, "We withdrew our forces from Beit Hanoun after having completed our mission," referring the rockets, anti-tank weapons, explosives and other weapons that had been confiscated during the operation.

The spokesman added, "Nine commandos who were preparing to launch rockets into Israeli territory were attacked by our forces. Dozens of suspects were also arrested for interrogation."

The military issued a statement, emphasizing it will "continue to act with determination in order to destroy terrorist organizations and terrorist infrastructure and in order to prevent and disrupt the launching of rockets at Israel."

Residents confirmed that the army withdrew to the outskirts of Beit Hanoun, close to the Gaza-Israel border late Monday night and into Tuesday morning. The operation destroyed much of Beit Hanoun's infrastructure and has been described as resembling an earthquake.

According to Ali Uda, a doctor at a hospital in Beit Hanoun, twenty-four tanks had been stationed around the hospital.

In a written plea to the UN Security Council Palestinian President Mahmoud Abbas called for a mutual ceasefire between Israeli and Palestinian forces in the Gaza Strip monitored by UN observers.

Israel claimed that the offensive was part of the ongoing operation to recover captured soldier Gilad Shalit. For the life of one Israeli soldier, more than 300 Palestinians have been killed since July this summer. Fifty-two Palestinians, including 16 civilians, have been killed and more than 200 have been injured in six days.

The statement reads in part, "Once again the Zionist regime's brutal and ferocious nature was revealed and in an unbalanced battle field they dastardly assaulted the unsheltered women and children in the exalted and ever-lasting land of Palestine."

"The wicked Zionist regime under the auspices of the U.S.
government commits murder and infringement. The Palestinian innocent women and children along with their brave men will ultimately overthrow the Zionist regime and the world arrogant powers, just it was witnessed in heroic Lebanon," the statement read.

According to the statement, the parliamentarians while pronouncing their hatred toward the inhumane and cruel actions of the Zionists, declared that the future belongs to the oppressed Palestinian nation who will pave the ground to say victory prayers in the lofty occupied lands of Masjed al-Aqssa.

"We are very optimistic, but on our side we must do everything to prepare for a worst scenario and we are readying for a scenario that Resolution 1701 will not succeed," he said, referring to the UN Security Council resolution that ended the fighting.

Hazoot was speaking to a group of reporters from the spot where Hizbullah seized two soldiers in July 12 cross-border raids that killed eight other servicemen and sparked Israel's massive assault on the Shia militia. "We will not give Hizbullah the opportunity to come back to these positions," he said, gesturing to Lebanese territory across the border. "We will do everything now to prevent Hizbullah from coming back and sitting on the border."

The liberal Haaretz daily on Monday wrote that according to military assessments, Hizbullah and Syria "are likely to start a war against Israel next summer" and "all preparations are being made to ensure maximum preparedness." Israel and the Shia militia fought a 34-day war that ended with a UN-brokered truce on August 14.