Israeli officials say their government is considering halting its three-week offensive against Hamas in the Gaza Strip, that has killed at least 1,100 Palestinians.
Officials say Israeli Prime Minister Ehud Olmert is expected to convene his security cabinet on Saturday for a vote on a unilateral ceasefire.
Earlier on Friday, U.S. Secretary of State Condoleezza Rice and Israeli Foreign Minister Tzipi Livni signed an agreement in Washington offering U.S. help to Israel in solving the problem of arms smuggling in Gaza. The deal is intended to keep Hamas from re-arming if a cease-fire is reached.
Hamas officials were due to continue truce talks with Egyptian negotiators on Saturday, after Egyptian officials met with the Israeli envoy Amos Gilad in Cairo on Friday.
Despite talk of progress on a possible cease-fire, exiled Hamas leader Khaled Meshaal told Arab leaders the Islamist group would not accept Israeli conditions for a cease-fire in the Gaza Strip. He made the comments during an emergency summit in Doha, Qatar.
Israeli air strikes continued in Gaza on Friday, while militants in the territory fired at least 15 rockets into Israel.
Israel has called for an end to Palestinian rocket attacks and weapons smuggling into Gaza.
Hamas has proposed a year-long, renewable truce in Gaza, leading to the withdrawal of Israeli troops within a week and the immediate opening of all border crossings.
At Friday's Doha summit, Qatar and Mauritania announced they would cut political and economic ties with Israel to protest the fighting in Gaza.
The summit went ahead despite a boycott by Egypt, Saudi Arabia and the Palestinian Authority, which Hamas ousted from Gaza, highlighting fault lines in the Arab world over the conflict.
Turkish state-run media reported that Turkish Prime Minister Recep Tayyip Erdogan told U.N. Secretary General Ban Ki-moon he was disappointed the United Nations did not take a more active role in resolving the conflict. Mr. Ban was in Turkey on Friday to meet with leaders during his visit to the Middle East.
The U.N. chief has repeatedly called on both Israel and Hamas to abide by a U.N. Security Council resolution calling for an immediate cease-fire in Gaza.
Palestinian medics say more than 1,100 Gazans, including 300 children, have been killed in Israel's three-week-long campaign. Thirteen Israeli soldiers and civilians have also died in the conflict.