The leader of Hamas on Sunday warned against Israel's proposal to temporarily halt settlement construction in exchange for normalization with Arab countries, describing it as "dangerous."

Khaled Mashaal also told reporters during his brief visit to Cairo that despite new German mediation efforts, there was still a long way to go in negotiations over the release of an Israeli soldier held by the militant group since 2006.

"As you know there has been a development with the German mediation taking place with the knowledge of Egypt and in coordination with us," he said, referring to talks over a prisoner exchange including Sgt. Gilad Schalit. "We are still in the beginning we haven't yet gotten into details or discussing the names, there is a still not a short path to go, which requires patience."

Hamas demands the release of hundreds of Palestinians by Israel, in exchange for Schalit. His release is considered a key to lifting the siege on the seaside territory, in place since 2007.

Mashaal's comments came after the Israeli government proposed on Friday the construction of hundreds of new apartments in West Bank settlements ahead of a building slowdown presented as a concession toward peacemaking in exchange for improved ties with Arab countries.

"This is a very dangerous equation," said Mashaal. "There is an Israeli effort to avoid the American demands," he said referring to U.S. call for a full settlement freeze."We warn against any Arab rush toward normalization."

Amr Moussa, the secretary general of the Arab League, who appeared with Mashaal, said that "the reaction would be tough" on any Arab country improving relations with Israel in response to this offer.

Mashaal said that much of his discussions in Egypt focused on promoting reconciliation among the Palestinians so that they could present a united face in peace negotiations.

A Palestinian unity deal is seen as a prerequisite for an eventual Mideast peace agreement, but months of reconciliation talks have yielded little progress.

"The brothers in Egypt will present a paper (on reconciliation) in the coming days. We have until beginning of October to discuss it," he said.

Mashaal also welcomed the Obama's administration calls for a settlement freeze, but said he awaited concrete U.S. measures in the peace process.