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With just hours to go before the so-called "humanitarian pause" was to end, both Hamas and Israel had been under international pressure to avoid a return to battle.
Four-year-old American girl also among released 17 hostages; 39 more Palestinians were freed from Israeli prisons
There was no comment from Israel on the report but there were fears it could jeopardise the third phase of plans to swap 50 hostages held by the Palestinian militant group for 150 prisoners in Israeli jails over a four-day period.
Israel released 39 Palestinians - six women and 33 minors - from two prisons, the Palestinian news agency WAFA said.
The hostages released by Hamas include 13 Israelis, 10 Thais and one Filipino.
According to Qatar's foreign ministry, 13 people would freed initially, all women and children from the same families.
Over 5,300 children have reportedly been killed in Gaza since early October.
Officials from Qatar, which has been mediating negotiations, as well as the US, Israel and Hamas have for days been saying a deal was imminent
Hamas officials are "close to reaching a truce agreement" with Israel and the group has delivered its response to Qatari mediators, Ismail Haniyeh said in a statement sent to Reuters by his aide.
The Houthis said they had seized a ship in that area but described it as Israeli.