* Israel pounds Gaza despite Trump's call for end to bombing * Palestinians wonder when Trump's Gaza plan will be implemented * Egypt prepares to host ceasefire talks * Israeli markets hit highs in sign of optimism * (Adds comment from Palestinian man in paragraphs 5-6, Tel Aviv stock exchange official in paragraph 13, Tel Aviv resident in paragraph 14) By Nidal al-Mughrabi and Steven Scheer CAIRO/JERUSALEM Oct 5 (Reuters) – Israeli planes and tanks pounded areas across the Gaza Strip overnight and on Sunday, destroying several residential buildings, witnesses said, as Palestinians hoped a U.S. plan to end the war would soon ease their suffering. U.S. President Donald Trump, who had called for an end to the bombing, said on Saturday on his Truth Social platform that Israel had agreed to an "initial withdrawal line" inside Gaza and that "when Hamas confirms, the Ceasefire will be IMMEDIATELY effective." Israel escalated its offensive as Egypt prepares to host delegates from Hamas, Israel and the United States, and Qatar, to kick off talks over the implementation of the most advanced effort yet to halt the conflict. Some Palestinians, who have seen multiple ceasefire efforts fail since the war began two years ago then spread through the Middle East, are losing patience. Displaced Palestinian man Ahmed Assad was hopeful when news broke of Trump's plan. "Unfortunately, there is no translation for this on the ground. We do not see any change to the situation, on the contrary, we don’t know what action to take, what shall we do? Shall we remain in the streets? Shall we leave?" he asked. EGYPT TALKS WILL TACKLE UNRESOLVED ISSUES Hamas had drawn a welcoming response from Trump on Friday by saying it accepted certain key parts of his 20-point peace proposal, including ending the war, Israel's withdrawal, and the release of Israeli hostages and Palestinian captives. But the group left some issues up for further negotiation, as well as questions unanswered, such as whether it would be willing to disarm, a key demand from Israel to end the war. "Progress would depend on whether Hamas would agree to the map, which shows the Israeli army would remain in control of most of the Gaza Strip," said a Palestinian official, close to the talks. "Hamas may also ask for a strict timetable for the Israeli withdrawal from Gaza. The first phase of talks will determine how things are going to proceed," he told Reuters, asking not to be named. In a sign of Israeli optimism over the Trump plan, the shekel currency hit a three-year high against the dollar and Tel Aviv stocks reached an all-time high. Yaniv Pagot, head of trading at the Tel Aviv Stock Exchange, said the rally reflected a shift from depression to optimism. "It's the first time in months that I'm actually hopeful. Trump has really instilled a lot of hope into us, and we believe in him and his leadership," said Tel Aviv resident Gil Shelly. Domestically, Israeli Prime Minister Benjamin Netanyahu is caught between growing pressure to end the war — from hostage families and a war-weary public — and demands from hardline members of his coalition who insist there must be no let-up in Israel's campaign in Gaza. Far-right Finance Minister Bezalel Smotrich said on X that halting attacks on Gaza was a "grave mistake." Smotrich and Security Minister Itamar Ben-Gvir, also a hardliner, have significant influence in Netanyahu's government and have threatened to bring it down if the Gaza war ends. ARAB STATES WELCOME HAMAS RESPONSE TO TRUMP PLAN But opposition leader Yair Lapid of the centrist Yesh Atid party has said political cover will be provided so the Trump initiative can succeed and "we won't let them torpedo the deal". In Gaza City, which Israel describes as one of Hamas' last bastions, Israeli forces continued attacks and warned residents who left against returning, saying it was a "dangerous combat zone." On Sunday, witnesses said Israeli planes escalated attacks against targets across the city, Gaza's biggest urban centre. GAZANS DESPERATE FOR START OF TRUMP'S TRUCE PLAN Local health authorities said at least one Palestinian was killed, and several others were wounded in those attacks. Three other people were killed in separate Israeli strikes across the enclave, medics said. Under Trump's plan, all Israeli hostages, alive and deceased, were due to be released within 72 hours of Israel publicly accepting the agreement. Israel says 48 hostages remain, 20 of whom are alive. There may be logistical challenges too. Sources close to Hamas told Reuters handing over living hostages could prove relatively straightforward, but retrieving bodies of dead ones amid the huge devastation and rubble of Gaza may take longer than a few days. Trump said on Friday he believed Hamas had shown it was "ready for a lasting PEACE" and he called on Netanyahu's government to halt airstrikes in Gaza. Israel began attacking Gaza after the October 7, 2023, Hamas-led attack on Israel in which some 1,200 people, mostly civilians, were killed and 251 taken hostage, according to Israeli tallies. Israel's campaign has killed more than 67,000 people in Gaza, most of them civilians, according to Gaza health authorities. (Additional reporting by Jaidaa Taha in Cairo, Mahmoud Issa in Gaza and Miro Maman in Tel Aviv; Writing by Michael Georgy; Editing by Lincoln Feast, William Maclean and Louise Heavens)
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