Israel's army chief and Hamas (search) replaced weapons with words Thursday, each claiming victory after 33 months of bloody conflict, while a four-day-old truce appeared to hold despite new violence.

Israel released several Palestinian prisoners, including Suleiman Abu Mutlak, a top Palestinian security official from Gaza. Palestinians demand that Israel free more than 5,000 people captured in Israeli sweeps, but Israel has only released several dozen, many of whom had served most of their sentences.

Interviewed on Israel TV, Mohammed Dahlan, the Palestinian minister in charge of security, called for the release of 416 prisoners serving long sentences, saying they had been instrumental in pressing militant leaders to call a truce.

The truce and recent steps forward under the U.S.-backed peace plan were generating some optimism -- and some sharply differing outlooks on the violence that has torn the area since September 2000.

"There is a good chance these days to bring the latest round of violence to an end," Israel's army chief, Lt. Gen. Moshe Yaalon told the Yediot Aharanot daily.

"Israeli society withstood the test, and the army fought the terror with heroism, we now need to announce that we have won and carry on," Yaalon said, adding that Hamas had been forced to stop its attacks.

Hamas spokesman Abdel Aziz Rantisi retorted that it was the militant group that scored the military and diplomatic victory. "These statements reflect the low nature of this criminal," he said of Yaalon.

Israeli Prime Minister Ariel Sharon (search) was upbeat in an address Thursday in Jerusalem. "For the first time since I entered the office of prime minister, there is a real possibility of an end to terror and the return to normal life," he said.

President Bush called Palestinian Prime Minister Mahmoud Abbas (search) and praised him for progress along the U.S.-backed "road map" to peace, saying he hoped to celebrate Palestinian independence in 2005, said a statement from Abbas' office.

In Thursday's prisoner releases, Abu Mutlak was sent home after two months in Israeli administrative detention on suspicion of involvement in a Gaza bombing in November 2000 that killed two Israelis and wounded three children. A military court ruled there was insufficient evidence to hold him.

Later, Israel planned to free 33 Palestinians arrested in a sweep through the Palestinian city of Hebron after a homicide bomber destroyed a bus in Jerusalem on June 11, Army Radio reported.

Relatives of the Israeli victims of Palestinian attacks complained about the release of prisoners, warning that it would result in more violence.

Most of the prisoners on the release lists so far have either completed their terms or were never charged.

The prisoner release was the latest in a series of moves toward ending the 33-month conflict that has cost the lives of 2,416 people on the Palestinian side and 807 on the Israeli side.

On Sunday, three main Palestinian groups declared a temporary halt to attacks, and Israeli troops withdrew from parts of the Gaza Strip, handing security control to the Palestinians. On Wednesday, Palestinian police marched back into the West Bank town of Bethlehem.

Violence late Wednesday and Thursday did not appear to immediately threaten peace efforts.

U.S. State Department spokesman Richard Boucher called on the parties to keep on the path to peace. "We've seen violent acts from time to time. The goal is to work together to stop them and to create a momentum, set a positive direction," he said in Washington.

In an early morning raid, Israeli troops killed a local leader of the Al Aqsa Martyrs' Brigades, a militia linked to Yasser Arafat's Fatah movement, when an arrest turned violent in the West Bank city of Qalqiliya, the army said. The man killed was identified as Mahmoud Shawer, an assistant to Ibrahim Mansour, the militia leader in Qalqiliya, who was arrested.

About 30 gunmen from Al Aqsa and another armed group were among thousands marching in Shawer's funeral. A speaker from the militia promised revenge within 24 hours.

Tayeb Abdel Rahim, a senior aide to Arafat, called Shawer's killing an "assassination" and accused Israel of trying "to bring us back to the cycle of action and reaction."

Also, Palestinians fired four anti-tank shells at the isolated Jewish settlement of Kfar Darom in the Gaza Strip late Wednesday, wounding four Israelis. In response, Israeli soldiers closed for six hours a key intersection on the main Gaza road.

Touring northern Gaza, Abbas complained about the destruction wrought by Israeli tanks and bulldozers there in two months of efforts to stop Palestinian militants from firing rockets at a nearby Israeli town.

However, Abbas also denounced the attack on Kfar Darom. "This is an act of sabotage which we cannot accept," he said. Security chief Mohammed Dahlan, in an interview with Israel TV, pledged to apprehend the attackers.