Three major Palestinian groups declared a temporary cease-fire Sunday after 33 months of violence, and Israel pulled out of part of the Gaza Strip - breakthroughs in the U.S.-backed bid for peace.

An Israeli soldier, peeking out of his armoured personnel carrier, smiles after leaving the northern Gaza Strip town of Beit Hanoun near the Nahal Oz crossing that separates Israel from the Gaza Strip late Sunday June 29, 2003. [AP Photo]

The militant Islamic Jihad and Hamas groups announced a joint three-month cease-fire, while Yasser Arafat's Fatah faction declared a six-month truce.

Israel expressed doubts about the promises and insisted the Palestinian Authority must disarm the militants. The Bush administration welcomed news of the cease-fire, but said it wants to see more progress in the so-called "road map" to peace.

"Anything that reduces violence is a step in the right direction," White House spokeswoman Ashley Snee said. "Under the road map, parties have an obligation to dismantle terrorist infrastructure. There is still more work to be done."

Hopes for a turning point in the conflict also were boosted by a new security deal in which Israel was handing the Palestinian Authority control of a key area of Gaza.

Scores of Israeli armored vehicles pulled out of the northern Gaza town of Beit Hanoun after sundown, in line with a weekend agreement to restore Palestinian security control over some areas Israel reoccupied during the more than 1,000 days of fighting.

Sunday's rapid-fire developments came as U.S. National Security Adviser Condoleezza Rice held talks with Israeli Prime Minister Ariel Sharon in Jerusalem, a day after meeting with his Palestinian counterpart, Mahmoud Abbas.

Seeking to build on the advances, Rice is talking to both sides about further steps in implementing the road map to Mideast peace and Palestinian statehood by 2005, launched by President Bush at a June 4 summit.

For weeks, violence has bedeviled attempts to implement the plan. On Sunday, the death toll stood at 2,414 on the Palestinian side and 806 on the Israeli side.

Abdel Aziz Rantisi, a Hamas leader, read the Islamic militants' truce announcement in a phone call to The Associated Press. "The two movements decided to suspend military operations against the Zionist enemy for three months, starting today," Rantisi said.

Islamic Jihad leader Mohammed al-Hindi confirmed the truce took effect Sunday.

Rantisi reiterated a list of demands that accompanied the suspension of attacks. The two groups want Israel to halt all military strikes, including targeted killings of wanted militants. They also seek a release of Palestinian prisoners.

"We consider ourselves free from this initiative if the Israeli enemy does not implement all the conditions," said Rantisi, who survived a recent Israeli missile strike against him.

An Israeli border policeman guards a roadblock outside Bethlehem, preventing cars and people from passing to nearby towns, June 29, 2003. [Reuters]

Fatah, which negotiated the truce with the two militant groups, initially held off an official announcement because of internal wrangling. Leading members of the faction - headed by Arafat and Abbas - were upset that they had been kept out of the negotiations.

A Fatah-affiliated militia, the Al Aqsa Martyrs' Brigade, initially rejected the truce but came on board in time for the announcement, though renegade offshoots of the group threatened to continue violence.

The deal was largely negotiated by Marwan Barghouti, an uprising leader from Fatah jailed by Israel.

After a meeting to defuse the crisis, Palestinian Foreign Affairs Minister Nabil Shaath called on Israel to respond to the truce by halting targeted killings, freezing Jewish settlement activity in Palestinian territories, and completing a full withdrawal from occupied Palestinian areas within six weeks.

"Things are promising and we must seize this moment," he said.

The cease-fire declarations apply to settlers and soldiers in the West Bank and Gaza as well as inside Israel, a key Israeli demand.

Israeli said they feared militants will use the cease-fire to regroup and plan more attacks. The government wants the Palestinian Authority to dismantle militant groups like Hamas and Islamic Jihad, as required by the road map.

"We are not holding our breath," Israeli Foreign Ministry official Gideon Meir said. "There cannot be peace with Hamas and peace with Israel at the same time. It's either, or."

Rice and Sharon, meanwhile, discussed the Israeli troop pullback and an easing of restrictions, including a release of Palestinian prisoners and the possible rebuilding of the Palestinians' international airport in southern Gaza, an Israeli official said. Israel destroyed the runway in 2001.

The official also said Rice criticized the building of an Israeli security fence around parts of the West Bank, saying it could prejudice future negotiations over a border.

Meanwhile, the Palestinian security chief in northern Gaza met with his Israeli counterpart at the Netzarim junction to decide what areas would be transferred to Palestinian control. They emerged from their cars, shook hands and then stood together on a sand hill to survey the area.

Within hours, Israeli forces had started building a watchtower at a new position, several yards from the road.

Later, bulldozers started tearing down sand barriers blocking roads around Beit Hanoun, and a long line of tanks snaked northward from the town. About 400 Palestinian police were poised to take over security responsibility for the area.

"I hope that this will be the last time we see them as invaders," said Rafet Jamal, 45, watching on a balcony with his 12-year-old son. "It's time to rebuild our nation, our society, and replant the roots of peace," said Jamal, whose farm was bulldozed by Israeli troops when they moved into the town.

As the last tanks pulled out of town, two young boys emerged from a house and planted a Palestinian flag in the sand.

Israeli forces have moved in and out of the area, last seizing it several weeks ago to halt militants from firing rockets at an Israeli town just beyond the Gaza fence.

Palestinian Information Minister Nabil Amr welcomed the pullback as "a serious step" toward implementing the road map, but said Israeli forces must also withdraw from the rest of the territories occupied over the past 33 months.

The handover agreement, reached over the weekend in talks between Palestinian security chief Mohammed Dahlan and Israel's Maj. Gen. Amos Gilad, came with a pledge by Israel to halt targeted killings of wanted Palestinians.

Palestinians in turn agreed to act against militants attempting attacks against Israelis. But Israel has reserved the right to go after assailants themselves if Palestinians fail to do so.

During Saturday's meeting with Abbas, Rice renewed an invitation for him to come to the White House. The Bush administration said no date was set; a senior Palestinian official said it would take place soon.

Abbas would be the first Palestinian leader in three years to enter the White House. Bush has boycotted Arafat, saying he is tainted by terror, while Sharon has met repeatedly with the president.

Internal Palestinian talks also were held over the weekend to try to get 10 smaller factions to agree to a truce.

One of those groups, the Popular Front for the Liberation of Palestine, said Sunday it would not join a declaration, but would not violate a truce either. The group's leader is under internationally supervised arrest in a Palestinian prison for his role in the 2001 killing of an Israeli Cabinet minister.

Despite the progress, violence continued Sunday. The army said Palestinian gunmen opened fire at settlers in Kiryat Arba, near Hebron in the West Bank. Israeli security forces fired warning shots. There were no reports of injuries.

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