Palestinians celebrate the ceasefire agreement between Israel and Hamas in Gaza City on Wednesday. (Adel Hana/Associated Press)

Hamas leaders and thousands of flag-waving supporters declared victory over Israel on Thursday on Gaza's first day of calm under an Egyptian-brokered truce, as Israeli officials flew to Cairo for talks on easing a blockade on the battered Palestinian territory.

Eight days of punishing Israeli airstrikes on Gaza and a barrage of Hamas rocket fire on Israel ended inconclusively.

While Israel said it inflicted heavy damage on the militants, Gaza's Hamas rulers affirmed that Israel's decision not to send in ground troops, as it had four years ago, was a sign of a new deterrent power.

'Guard this deal as long as Israel respects it.'—Gaza Prime Minister Ismail Haniyeh of Hamas

"Resistance fighters changed the rules of the game with the occupation, upset its calculations," Gaza Prime Minister Ismail Haniyeh of Hamas said in a televised speech. "The option of invading Gaza after this victory is gone and will never return."

At the same time, Haniyeh urged Gaza fighters to respect the truce and to "guard this deal as long as Israel respects it."

Israeli Prime Minister Benjamin Netanyahu said the offensive's aims of halting Gaza rocket fire and weakening Hamas were achieved. "I know there are citizens who were expecting a harsher response," he said, adding that Israel is prepared to act if the ceasefire is violated.

Thousands of Israeli soldiers who had been sent to the border during the fighting withdrew Thursday, the military said.

Israel launched the offensive Nov. 14 to halt renewed rocket fire from Gaza, unleashing some 1,500 airstrikes on Hamas-linked targets, while Hamas and other Gaza militants showered Israel with just as many rockets.

During the fighting, 161 Palestinians died, including 71 civilians. Six Israelis — two soldiers and four civilians — were killed and dozens others wounded by rockets fired into residential neighbourhoods.

Meanwhile on Thursday, an Israeli army spokesperson said an Israeli Arab who is a member of Hamas has been arrested for a bus bombing in Tel Aviv the day before. The bombing injured 27 people near Israel's military headquarters and threatened to scuttle efforts to broker the ceasefire.

Israeli military spokeswoman Lt.-Col. Avital Leibovich reported on Twitter that authorities had arrested the man who planted the bomb on the bus and identified him as an Arab Israeli from the village of Taybeh. She said he was a member of Hamas.

Blockade talks underway

Despite the tough talk, the ceasefire raised hopes of a new era between Israel and Hamas.

A senior Israeli official and three aides arrived in Cairo late Thursday and were escorted to Egypt's intelligence headquarters, according to Egyptian airport officials, presumably to hammer out the details of a deal that would include easing a blockade of the territory.

The airport officials declined to be named because they were not authorized to give information to the media.

However, the vague language of the agreement announced Wednesday and deep hostility between the combatants made it far from certain the bloodshed would end or that either side will get everything it wants. Israel seeks an end to weapons smuggling into Gaza, while Hamas wants a complete lifting of the border blockade, which was imposed in 2007 after the militant group's takeover of Gaza.

Israeli officials also made it clear that their position had not warmed toward Hamas, which they view as a terrorist group aligned with their archenemy Iran and committed to the destruction of the Jewish state.

"Without a doubt, Israel in the long run won't be able to live with an Iranian proxy on its border," Israeli Foreign Minister Avigdor Lieberman told Israel's Channel 10. "As long as Hamas continues to incite against Israel and talk about destroying Israel, they are not a neighbour that we can suffer in the long run. But everything in its time."

Concessions needed

Hamas leader Khaled Mashaal and the head of the smaller Islamic Jihad militant group Ramadan Shalah met with Egypt's intelligence chief Thursday as the follow-up talks geared up.

Reaching a deal on a new border arrangement for Gaza would require major concessions from both sides.

Hamas wants both Israel and Egypt to lift all border restrictions.

In 2007, Israel and Egyptian President Mohammed Morsi's pro-Western predecessor, Hosni Mubarak, sealed the territory, banning virtually all travel and trade. Israel eased its restrictions somewhat in 2010 in response to international pressure, allowing Gazans to import consumer goods, while barring virtually all exports and travel. Gaza's battered economy recovered slightly, but the ban on exports prevented it from bouncing back fully.

After Mubarak's fall last year, Egypt eased travel through its Rafah crossing with Gaza. However, Morsi has rebuffed Hamas demands to allow full trade ties, in part because of fears this would give an opening to Israel to "dump" Gaza onto Egypt and deepen the split between Gaza and the West Bank.

Palestinians hope the West Bank and Gaza, which lie on opposite sides of Israel, will one day make up the bulk of a Palestinian state. Israel has barred most travel between them during the past decade and closer ties between Egypt and Gaza could exacerbate the division.

Israel, meanwhile, wants Egypt to halt weapons smuggling into Gaza through tunnels under the border. Hamas has been able to significantly boost its arsenal in the past four years, largely with weapons from Iran, according to Mashaal, who thanked Tehran for its support late Wednesday.

As part of the ceasefire, Israel received U.S. pledges to help curb arms shipments to Gaza.