World Bulletin/News Desk

A Gaza ceasefire was holding on Wednesday and U.S. Secretary of State John Kerry, echoing Israel's position, linked a lifting of blockades of the devastated enclave to Hamas giving up its rocket arsenal.

Israel withdrew ground forces from the Gaza Strip on Tuesday morning and started a 72-hour ceasefire with Hamas mediated by Egypt as a first step towards negotiations on a more enduring end to the month-old war.

"What we want to do is support the Palestinians and their desire to improve their lives and to be able to open crossings and get food in and reconstruct and have greater freedom," Kerry said.

"But that has to come with a greater responsibility towards Israel, which means giving up rockets, moving into a different plane," he said on the BBC's HARDtalk programme.

Israel sent officials to join talks in Cairo to cement a longer-term deal during the course of the current truce. Hamas and Islamic Jihad also dispatched representatives from Gaza.

In Gaza, where some half-million people have been displaced by a month of bloodshed, some residents left U.N. shelters to trek back to neighbourhoods where whole blocks have been destroyed by Israeli shelling and the smell of decomposing bodies fills the air.

RESTRICTION TO HUMANITARIAN AID

An Israeli official, who declined to be identified, said Israel wanted humanitarian aid to flow to the Gaza Strip, but the import of cement - vital for reconstruction - would depend on achieving guarantees that it would not be used by militants to construct more tunnels.

Palestinians demand an end to the Israeli-Egyptian blockade on impoverished Gaza and the release of prisoners, including those Israel arrested in a June crackdown in the occupied West Bank.

Israel has also resisted those demands.

Hamas has ruled out giving up its weapons.

Izzat Rishq, a senior Hamas official, said disarming isn't up for discussion. "We'd take the life of anyone who tries to take the weapons of resistance," he said.

Gaza officials say the war has killed 1,867 Palestinians, most of them civilians. Israel says 64 of its soldiers and three civilians have been killed.

Besides the loss of life, the war has cost Gaza economically, as it faces a massive $6-billion price tag to rebuild devastated infrastructure.

According to initial figures from Gaza's main UN aid agency, about 10,000 homes were destroyed or damaged beyond repair. Gaza's only power plant was forced to shut down last week after being shelled by Israel, and repairs will take months, Gaza officials said.

One of the hardest-hit areas was the southern town of Rafah, where intense shelling over the weekend appeared to have spared little. Mosques, homes, offices, stores and at least one school either lay in ruins or were badly damaged, hit by shrapnel or gunfire.

Palestinian officials said a donor conference to raise funds for Gaza's reconstruction would be held in Oslo next month.