The Israeli army on Saturday gave a first indication it was ending operations in parts of Gaza, while continuing to bombard other areas ahead of fresh truce talks in Cairo.
As a Palestinian delegation flew to Egypt in search of a ceasefire, the Israeli army messaged residents of part of northern Gaza that it was "safe" to return home.
"They have been informed it is safe for civilians to return to Beit Lahiya and Al-Atatra," a spokeswoman told AFP, in what was understood to be a confirmation that troops had stopped operating there.
Witnesses in the north confirmed seeing troops leaving the area as others were seen leaving another flashpoint area in southern Gaza.
It was the first time troops had been seen pulling back since the start of Israel's devastating 26-day operation, which has so far claimed more than 1,660 Palestinian lives and displaced up to a quarter of the territory's population.
The move came after an army spokesman told AFP Israel was "quite close to completing" the destruction of tunnels used for infiltrating southern Israel -- the main objective of the ground operation.
Despite the partial withdrawal, Israel's security cabinet decided against sending a delegation to ceasefire talks with the Palestinians in Cairo, media reports said.
"Hamas has proven that it breaches any agreement reached right away, as happened five times in previous truces," deputy foreign minister Tzahi HaNegbi told AFP, without confirming the report.
"It is therefore unclear at this stage what benefit Israel might see for participating in an attempt to reach agreements, based on the Egyptian initiative," he said, as media reports suggested the pullback could signal the start of a unilateral withdrawal.
Prime Minister Benjamin Netanyahu was to give an address at 1800 GMT at which he was expected to address the mission to destroy the tunnels, officials said.
- Truce deal unlikely -
Chances of achieving a more permanent ceasefire nosedived on Friday after Israel said it believed Hamas militants had captured a 23-year-old soldier in a Friday morning ambush near the southern Gaza city of Rafah.
Immediately afterwards, Israel bombarded the Rafah area in shelling that is still ongoing, with medics saying it killed 114 people in 24 hours.
Since midnight (2100 GMT), more than 86 people have been killed, the vast majority in Rafah, raising the overall toll to 1,676, emergency services spokesman Ashraf al-Qudra said, putting the number of wounded at more than 9,000.
UN figures indicate at least two thirds of the dead are civilians, with around one third women and children.
The alleged capture of Second Lieutenant Hadar Goldin drew sharp condemnation from the United Nations and the White House, which jointly brokered the abortive 72-hour truce and demanded his immediate release.
Hamas's armed wing, the Ezzedine al-Qassam Brigades, acknowledged its militants had staged an ambush early Friday in which soldiers were killed, but denied holding the soldier, saying the attackers were missing and presumed dead.
"We have lost contact with the mujahedeen unit that was in that ambush, and we think that all the fighters in this unit were killed by Zionist shelling along with the soldier, who the enemy says is missing, assuming our combatants captured this soldier during the fighting," it said,
"Until now, we in Qassam have no knowledge of the missing soldier, or his whereabouts or the circumstances of his disappearance."
- Hunt goes on -
Israel considers the capture of its soldiers a casus belli, launching a 34-day war on the Lebanon's Hezbollah in 2006 after it seized two soldiers.
Around the same time, Gaza militants captured conscript Gilad Shalit and held him for five years before freeing him in exchange for more than 1,000 Palestinian prisoners.
Goldin's family also made their own emotional appeal on Saturday evening in an address to the Israeli leadership.
"I demand that the state of Israel not leave Gaza without bringing my child back home to me," said his mother Hedva, her voice breaking.
"I cannot imagine that the army would abandon one of its fighters," said her husband Simcha outside their home in Kfar Saba near Tel Aviv.
Meanwhile, air strikes and tank fire continued pounding huge areas of southern Gaza into rubble, killing scores more people on Saturday, as militants kept up their cross-border fire, with 56 rockets hitting Israel and another six downed, including two over greater Tel Aviv.
With a 12-member Palestinian delegation due to arrive for truce talks in Cairo on Saturday evening, Egypt's President Abdel Fattah al-Sisi said his country's truce proposal offered a "real chance to find a solution to the crisis" but that it must be implemented quickly to stop the bloodshed.
Among the delegation was senior Ramallah official Azzam al-Ahmad, Palestinian intelligence chief Majid Faraj, senior Hamas official Mussa Abu Marzuq, and Ziad al-Nakhale, a leader of Islamic Jihad.
Speaking to AFP, a senior Palestinian official told AFP that Israel was not expected to attend the Cairo talks and that US Deputy Secretary of State William Burns would also not be flying to Cairo, as announced.
In his place, Washington was to send Frank Lowenstein, the acting US envoy for the Middle East peace process, a State department official said.