WRAPUP 3-U.S. pauses some weapons to Israel as battles rage around Rafah

* LATEST DEVELOPMENTS:

* Rafah "on the brink of a humanitarian catastrophe" says mayor

* CIA Director Bill Burns to meet Netanyahu and Mossad counterpart

* Israel says it conducts raids on Gaza side of Rafah crossing

By Nidal al-Mughrabi, Steve Holland and Mohammad Salem CAIRO/WASHINGTON/RAFAH, Gaza Strip, May 8 (Reuters) - H amas said it was battling Israeli troops on the outskirts of the Gaza Strip's crowded southern city of Rafah on Wednesday after a U.S. official said Washington had halted a shipment of powerful bombs that Israel could use in a full-scale assault.

The United States, which is seeking to stave off an Israeli invasion of Rafah, said it believes a revised Hamas ceasefire proposal may lead to a breakthrough in an impasse in negotiations, with talks resuming in Cairo on Wednesday. Israel has threatened a major assault on Rafah to defeat thousands of Hamas fighters it says are holed up there, but Western nations and the United Nations have warned a full-scale attack on the city would be a humanitarian catastrophe.

Hamas said its fighters were battling Israeli forces in the east of Rafah, where hundreds of thousands of Palestinians have sought refuge from combat further north in the enclave. Residents said the fighting was still on the outskirts. A senior U.S. official said President Joe Biden's administration paused a shipment of weapons to Israel last week in an apparent response to the expected Rafah offensive. The White House and Pentagon declined to comment.

The official, speaking on condition of anonymity, said Washington had carefully reviewed the delivery of weapons that might be used in Rafah, and as a result paused a shipment consisting of 1,800 2,000-lb bombs and 1,700 500-lb bombs. This would be the first such delay since the Biden administration offered its "ironclad" support to Israel after Hamas' Oct. 7 attack. Washington is Israel's closest ally and main weapons supplier.

A senior Israeli official declined to confirm the report, asking not to be named: "If we have to fight with our fingernails, then we'll do what we have to do," the source said. A military spokesperson said any disagreements were resolved in private. Israeli forces seized the main border crossing between Gaza and Egypt in Rafah on Tuesday, cutting off a vital aid route.

Residents and officials said Rafah's city council building was hit by Israeli tank fire on Tuesday and caught fire. "The streets of the city echo with the cries of innocent lives lost, families torn apart, and homes reduced to rubble. We stand on the brink of a humanitarian catastrophe of unprecedented proportions," Rafah's mayor, Ahmed Al-Sofi, said in an appeal to the international community to intervene.

The Israeli military said on Wednesday it had uncovered Hamas infrastructure in several locations in eastern Rafah and its troops were conducting targeted raids on the Gaza side of the Rafah crossing and airstrikes across the Gaza Strip. It has told civilians to go to an "expanded humanitarian zone" in al-Mawasi, some 20 km (12 miles) away.

Armed groups of Hamas, Islamic Jihad and Fatah said in separate statements that gunfights continued in the central Gaza Strip, while residents of northern Gaza reported heavy Israeli tank shelling against eastern areas of Gaza City and districts. CEASEFIRE TALKS

In Cairo, all five delegations participating in talks on Tuesday - Hamas, Israel, the U.S., Egypt and Qatar - reacted positively to the resumption of negotiations, and meetings were expected to continue on Wednesday, two Egyptian sources said. CIA Director Bill Burns was to travel from Cairo to Israel on Wednesday to meet Israeli Prime Minister Benjamin Netanyahu and his Mossad counterpart, an Israeli government source said.

Israel on Monday declared that a three-phase proposal approved by Hamas was unacceptable because terms had been watered down. White House spokesperson John Kirby said the new text presented by Hamas suggests the remaining gaps can "absolutely be closed." The proposal included a first phase with a six-week ceasefire, an influx of aid to Gaza, the return of 33 Israeli hostages, alive or dead, and the release by Israel of 30 detained Palestinian children and women for each released Israeli hostage, according to several sources.

Since a week-long ceasefire in November, the only pause so far, the two sides have been blocked by Hamas' refusal to free more Israeli hostages without a promise of a permanent end to the conflict and Israel's insistence on only a temporary halt. Israel's offensive has killed 34,789 Palestinians, most of them civilians, the Gaza Health Ministry said.

The war began when Hamas militants attacked Israel on Oct. 7, killing about 1,200 people and abducting 252 others, of whom 128 remain hostage in Gaza and 36 have been declared dead, according to the latest Israeli figures. Al-Sofi, Rafah's mayor, said 1.4 million people sheltering in the city had nowhere to go. Those in eastern neighbourhoods were being told to move to the coastal al-Mawasi area "which lacks the necessities of life", he said.

Around 200 patients from Rafah's Abu Youssef al-Najjar Hospital, in an area designated by the Israeli army as a combat zone, were forced to evacuate to the west of the city after receiving calls warning them to leave, health officials said. Israel was reopening Kerem Shalom crossing on its border with the Gaza Strip on Wednesday, a statement from the Israeli agency in charge of it said, adding aid trucks routed through from Egypt were already undergoing security inspections there.

Israel had closed Kerem Shalom crossing on Sunday after Palestinian shelling nearby killed four soldiers. The United Nations had warned the closure of both the Rafah and Kerem Shalom crossings had "choked off" the two main arteries for getting aid into Gaza, with stocks low inside the enclave.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)