Gunmen began withdrawing from Gaza's streets, some hostages were released and many shops reopened on Sunday as a shaky ceasefire appeared to be taking hold in factional fighting between Hamas and Fatah, residents said.
Local police took up positions at main intersections after a tense morning in which mortar bombs exploded near the offices of President Mahmoud Abbas of Fatah.
It was unclear how long this latest ceasefire, agreed late on Saturday, would hold. Previous deals to stop the fighting collapsed within days or hours. Gunmen from the governing Hamas movement released some of their Fatah hostages. But many more were still being held.
Residents of the narrow coastal strip, home to 1.5 million Palestinians, cautiously welcomed the relative calm after four days of fierce fighting in which 27 Palestinians were killed. "We hope that things will go back to normal," said Fadi Odwan as he reopened his perfume shop in Gaza City.
Tawfiq Abdo, owner of a clothing store, said the fighting took a heavy toll on Palestinian business owners like himself. "There must be a true intention to make it (the ceasefire) hold," he said.
A hospital official said two members of Abbas's presidential guard, a force that receives US-funded training and non-lethal equipment, died early on Sunday from gunshot wounds suffered in fighting over the weekend.
More than 80 Palestinians have been killed in the fighting since December, when unity government talks between Islamist Hamas and the long-dominant Fatah group it defeated at the polls last year broke down and Abbas called for new elections. Palestinians hoped a unity government would help ease a Western economic boycott of the Palestinian government.
SAUDI MEDIATION:
At the urging of Saudi Arabia, Abbas and Hamas's political leader Khaled Meshaal will hold meetings in the holy Muslim city of Mecca on Tuesday to try to resolve their differences.
Prime Minister Ismail Haniyeh of Hamas will leave Gaza shortly to take part in the talks, according to Mohammad al-Madhoun, director of Haniyeh's office. Previous talks ended without agreement.
Israeli officials said a summit meeting this month between US Secretary of State Condoleezza Rice, Israeli Prime Minister Ehud Olmert and Abbas hinged on the outcome of the Mecca talks.
Israel and the United States do not want Abbas to agree to a unity government that stops short of recognising Israel, renouncing violence and abiding by interim peace deals, as demanded by the "Quartet" of Middle East mediators.
Commenting on the violence between the rival factions, Olmert said: "This is an internal matter which we are not pleased about."
With Israel's approval, Egypt and Jordan have been supplying guns and ammunition to Abbas's forces, Israeli officials say. Although Hamas and Fatah said they would try to abide by the truce, tensions remained high.
Hamas's Izz el-Deen al-Qassam brigades called on Fatah gunmen and presidential guards who stormed and burned part of Gaza's Islamic University on Friday to turn themselves in to the brigade's leaders by Wednesday night or face "punishment". A nephew of Mohammad Dahlan, a powerful Fatah leader and a top security aide to Abbas, was abducted by gunmen over the weekend and his whereabouts remained unknown on Sunday.
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