Israeli and Palestinian negotiators are poised to resume indirect talks with Egyptian mediators on reaching a more permanent ceasefire before a current truce expires at midnight on Monday.

The Egyptian government persuaded both sides late Wednesday to adhere to a new five-day ceasefire, extending an earlier three-day agreement in order to allow more time to thrash out a longer-term truce.

It got off to a rocky start with Palestinian rocket attacks and retaliatory Israeli air strikes, but Saturday marked a sixth day of quiet following more than a month of fighting that has killed more than 1,960 Palestinians and 67 on the Israeli side.

Israeli and Palestinian negotiating teams are now expected back in Cairo for fresh talks, which the Palestinians said would begin on Sunday, after consulting their political leaders over the weekend.

The European Union welcomed the ceasefire in Gaza and said it was ready to expand a police mission in Rafah, on the border with Egypt, and train Palestinian Authority customs personnel and police for redeployment in Gaza.

"A return to the status quo prior to the latest conflict is not an option," said the Council of the EU on Friday following a foreign ministers' meeting in Brussels.

It said EU police would monitor the transit of supplies needed for Gaza reconstruction and try to prevent weapons from being smuggled into the territory.

A mission of 70 European police officers was set up at the crossing point in 2005, tasked with monitoring movements of people, goods and vehicles at Gaza's only window to the outside world that bypasses Israel.

But it was suspended two years later after Hamas seized power in the Gaza Strip.

The EU said a durable ceasefire must be accompanied by lifting closures on Gaza and called on "all terrorist groups" in the territory to disarm.

The Israeli foreign ministry welcomed the call for disarmament -- Israel's main demand at Cairo truce talks.

"Commitment to the principle of demilitarisation, to be implemented by an effective mechanism, will insure a fundamental change of the situation," it said.

Israel, under pressure from citizens who have endured more than 2,790 rocket attacks since July 8, refuses to countenance any major reconstruction effort without full demilitarisation.

Lifting the blockade

Azzam al-Ahmad, who heads the Palestinian delegation at Cairo talks, told AFP on Saturday he was quietly optimistic that an agreement for a longer-term truce could be reached.

"We have high hopes of reaching an agreement very soon, before the end of the truce, and perhaps even, very quickly, for a permanent ceasefire," he said.

But Hamas spokesman Sami Abu Zuhri struck a hardline, insisting that there can be no return to peace without a lifting of Israel's eight-year blockade of the beleaguered coastal enclave.

"We can reach an agreement if the Israeli side accepts all the demands of the unified Palestinian delegation, in particular the end of any aggression against our people, the war on Gaza and the complete lifting of the siege," Abu Zuhri said.

The Israelis have spoken little in public about the negotiations.

With demands seemingly irreconcilable, the Egyptian mediators and both sides will have their work cut out to hammer out a wording for each side to be able to present as some kind of achievement.

Israel refuses to deal directly with Hamas, whose charter calls for the destruction of the Jewish state, although Hamas is part of the Palestinian delegation that also includes Islamic Jihad and the Palestinian Authority of president Mahmud Abbas.

Talks on Sunday are expected to resume on the basis of an Egyptian proposal, seen by AFP, which calls for a lasting ceasefire beyond Monday midnight, and new talks on the thorniest issues, including demands for a seaport and airport in Gaza, to begin in a month's time.

Negotiations about handing over the remains of two dead Israeli soldiers in exchange for the release of Palestinian prisoners in Israeli jails would also be postponed, according to the document.

A buffer zone along Gaza's border with Israel would be gradually reduced and guarded by Palestinian Authority security teams.