CAIRO, Egypt - Egypt and Hamas were negotiating a proposal for a 10-day ceasefire in Gaza, officials said Wednesday, as the Palestinian death toll in the war passed 1,000 and smoke from Israeli air strikes rose over Gaza City's devastated streets.

Egyptian and Palestinian officials said they hoped to seal Hamas' agreement on a temporary halt in fighting, which would be presented to Israel for approval. Key uncertainties remained for a longer-term deal under which Gaza's borders would be open and Israeli troops would withdraw.

The officials provided details of the deal on condition of anonymity because of the sensitivity of the Egypt-Hamas talks. But Egyptian officials also expressed public optimism that momentum toward a deal was growing.

"We're working with Hamas and we're working with the Israeli side. We hope to reach an outcome soon," Hossam Zaki, a spokesman for Egypt's Foreign Ministry, told the British Broadcasting Corp.

A Hamas spokesman said he also believed an agreement was possible.

"There is good progress in Egypt. We hope that now Egypt will contact Israel and talk about all issues," Ghazi Hamad, a senior Hamas adviser, told the BBC.

Asked if a negotiated settlement could also include a deal between Hamas and the rival Palestinian administration, led by Palestinian President Mahmoud Abbas in the West Bank, Hamad said he was hopeful.

"I am optimistic now because I think there is no other choice for us," he said.

In Jerusalem, a senior Defence Ministry official said Israel was sending a chief envoy to Egypt on Thursday to present Israel's stance. Amos Gilad's trip has been postponed for days but his presence in Egypt would be a strong signal of progress.

At the same time, Aharon Abromovich, the director of Israel's Foreign Ministry, was travelling to Washington to discuss a potential American role in the ceasefire with diplomats and congressional officials.

Egypt's foreign minister, Ahmed Aboul Gheit, said details on the proposed ceasefire would be kept "under a lid of secrecy" until all parties agreed but said issues included an Israeli withdrawal from Gaza, opening crossings into the blockaded territory and some kind of international monitors.

Israel, meanwhile, showed no signs of slowing its bruising 19-day-old offensive, striking some 60 targets. One air strike hit a cemetery, spreading body parts and flesh over a wide area. The army said the air strike targeted a weapons cache hidden near the graveyard.

Guerrillas in Lebanon sent rockets crashing into northern Israel on Wednesday for the second time in a week, drawing an Israeli artillery barrage and threatening to drag the Jewish state into a second front.

The rocket fire in the north caused no injuries, but sent residents scurrying to bomb shelters. There was no immediate claim of responsibility, and speculation focused on small Palestinian groups. Hezbollah, the Iranian-backed guerrilla group that fought a monthlong war with Israel in 2006, denied involvement in last week's attack.

Israel launched the onslaught in Gaza on Dec. 27, seeking to stop Hamas from firing rockets into southern Israel. The offensive has killed more than 1,000 Palestinians, half of them civilians, according to the Palestinian Health Ministry. The toll included 11 Palestinians killed Wednesday, medical officials said.

Thirteen Israelis have also been killed since the offensive began, four by rocket fire from Gaza.

The Muslim world has expressed outrage over Israel's Gaza offensive, and in a new condemnation Wednesday, al-Qaida leader Osama bin Laden urged Muslims to launch a holy war against Israel.

Iran's top leader, Ayatollah Ali Khamenei, issued a religious opinion, or fatwa, declaring the purchase of any Israeli goods or trade with Israeli companies to be forbidden.

Desperately trying to end the fighting, United Nations Secretary General Ban Ki-moon opened a visit to the region Wednesday urging an immediate halt to the violence.

"My call is (for) an immediate end to violence in Gaza," he said in Cairo after meeting Egyptian President Hosni Mubarak.

"It is intolerable that civilians bear the brunt of this conflict," he said, adding that the "negotiations need to be intensified to provide arrangements and guarantees in order to sustain an endurable cease-fire and calm." Ban is scheduled to arrive in Israel on Thursday. He will also visit Jordan, the Palestinian-controlled West Bank, Turkey, Lebanon, Syria and Kuwait. His itinerary does not include a stop in Gaza because of the ongoing conflict.

Palestinian rocket fire has dropped off dramatically since the offensive began. Twelve rockets were fired at Israel on Wednesday, down from as many as 80 a day early in the operation.

Israeli police said Hamas fired a phosphorus shell from the Gaza Strip into Israel for the first time. Micky Rosenfeld, a police spokesman, said the mortar shell exploded in a field near the border town of Sderot on Wednesday evening. There were no casualties.

Human Rights Watch has said Israel used phosphorus shells, which illuminate targets at night or create a smoke screen for day attacks, against targets in Gaza.

Phosphorus shells can burn anything they touch.