Israel and Hamas both dampened hopes on Monday of a speedy breakthrough in Cairo talks towards a Gaza truce and hostage release deal after Egyptian state-linked media had reported "significant progress".

As the Gaza war raged on into a seventh month, Israel is under growing international pressure to agree to a ceasefire, including from its top ally and arms supplier the United States.

Prime Minister Benjamin Netanyahu insisted on Sunday -- half a year after the October 7 attack -- that Israel is "one step away from victory" and has vowed to defeat remaining Hamas fighters in Gaza's far-southern Rafah city.

On the same day however, the army also announced it had pulled its forces out of southern Gaza, although military commanders stressed the withdrawal was tactical and did not signal an end to the war.

Defence Minister Yoav Gallant said the troops would "prepare for future missions, including ... in Rafah" on the Egyptian border where almost 1.5 million Gazans live in crowded shelters and tents.

Israeli government spokesman Avi Hyman said "I wouldn't read too much into the fact that we've moved soldiers in or out of anywhere. I'll remind everyone that we're living in a tiny tiny country, we can move soldiers in or out very easily and very quickly."

Witnesses told AFP that more Israeli air strikes and artillery fire hit central Gaza, including near Gaza City and in Deir al-Balah, as well as in Rafah in the south.

Amid the threats and ongoing fighting, Netanyahu has sent negotiators to fresh truce talks that started in Cairo on Sunday, joined by US, Qatari and Egyptian mediators.

US President Joe Biden sent CIA chief Bill Burns to the talks, three days after a terse phone call with Netanyahu in which Biden demanded a halt to the fighting and greater steps to help and protect Gaza civilians.

Egypt's state-linked news outlet Al-Qahera reported "significant progress being made on several contentious points of agreement", citing an unnamed high-ranking Egyptian source.

The Qatari and Hamas delegations had left Cairo and were expected to return "within two days to finalise the terms of the agreement", it said, while the US and Israeli teams were also planning 48 hours of consultations.

However, Israel's Ynet news outlet cited an unidentified Israeli official as tempering the upbeat Egyptian report and stressing that "we still don't see a deal on the horizon".

"The distance is still great and there has been nothing dramatic in the meantime," the Israeli official was quoted as saying by the Hebrew-language website.