Israeli attacks in southern Gaza, however, continued as troops searched for one of its missing soldiers believed to have been captured by Hamas.
The chances of rival sides halting fire seemed remote with Israel saying it believed militants had captured a 23-year-old soldier in an ambush near the southern Gaza city of Rafah.
Israel has bombarded the Rafah area with medics saying it killed 114 people in 24 hours.
They said 8,900 Palestinians have been injured so far.
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Meanwhile, the Israeli army today told residents of Beit Lahiya town in northern Gaza that it was "safe" to return to their homes, as witnesses said troops were seen withdrawing from the area.
"We have told Beit Lahia residents that they may return to their homes. We advised them to avoid explosives placed by Hamas across the area," the Israel Defence Forces tweeted.
It was the first time troops had been seen pulling back since the start of the deadly 26-day conflict, which has forced up to a quarter of Gaza's population into exile.
"They have been informed it is safe for civilians to return to Beit Lahiya and Al-Atatra," she said in an apparent confirmation that troops had stopped operating there.
Witnesses in Al-Atatra, which is part of Beit Lahiya, reported seeing troops pulling back, in a move mirrored in the south, where residents said the soldiers had withdrawn from villages east of Khan Yunis, close to the Israeli border.
Despite the partial withdrawal, Israel's security cabinet decided against sending a delegation to ceasefire talks with the Palestinian delegation in Cairo.
A senior political official told army radio that Hamas was "not interested in an arrangement", with some commentators suggesting the pullback could signal the start of a unilateral Israeli withdrawal.