The Palestinian militant group Hamas disclosed on Thursday that European Union diplomats had held talks with some of its members, an apparent shift in EU policy that drew sharp criticism from Israel.

It was the latest sign of a softening of a diplomatic boycott against Hamas after the Islamist group, which advocates Israel's destruction, made a strong showing in Palestinian local elections held against the backdrop of a shaky cease-fire.

The Israeli newspaper Haaretz reported on Thursday that the EU had given low-level diplomats permission for contacts with representatives of Hamas's political wing.

There was no immediate comment from the 25-nation EU, which with the United States classifies Hamas as a terrorist group.

Israel, which rejects any contacts with Hamas, was quick to voice it concerns. "Hamas is a murderous terrorist organization responsible for countless acts of violence against Israeli civilians," Foreign Ministry spokesman Mark Regev said.

"We think the international community should be engaging the moderates in Palestinian society," he said. "We would be critical of a policy that could be perceived as appeasing the extremists."

Hamas is seen posing a growing challenge to moderate President Mahmoud Abbas's ruling Fatah party in coming parliamentary elections in the West Bank and Gaza Strip.

Hamas spokesman Mushir al-Masri said Hamas mayors elected in recent local council elections had discussed international assistance and the truce with Israel in talks with EU diplomats.

"Hamas is open to dialogue with all countries except the Zionist enemy, which occupies the land and kills our people," Masri said.

Hamas has killed hundreds of Israelis in suicide bombings during a Palestinian uprising that began in 2000. Israel has assassinated many of its leaders, including the group's founder and spiritual head Sheikh Ahmed Yassin.

U.S. SURPRISED

In an unsacred report, Haaretz said the EU decision had surprised the United States -- a co-sponsor with the EU, Russia and the United Nations of a Middle East peace "road map."

British Foreign Secretary Jack Straw disclosed last week that diplomats from his country had met officials from Hamas's political wing on two occasions. He said Britain would not have contacts with Hamas leaders until the group renounced violence.

Diplomats in Washington have said the United States is showing signs of easing its hardline approach toward Hamas. But the White House insisted there has been no change.

Israel's relations with the EU have long been strained over what it sees as pro-Palestinian bias. Israel prefers to deal with Washington on Middle East diplomacy.

Secretary of State Condoleezza Rice will hold separate talks in the region this weekend with Israeli and Palestinian leaders to try to help them coordinate a planned Israeli withdrawal from the occupied Gaza Strip starting in August.

Diplomatic sources said Prime Minister Ariel Sharon's office had rejected a U.S. request for a joint news conference with Rice out of concern that she might apply public pressure to Israel to offer more cooperation to Abbas at a summit next Tuesday. A U.S. embassy spokesman declined comment.

Also on Thursday, Israeli troops arrested several Islamic Jihad members including a local leader in the West Bank town of Jennie, drawing threats of retaliation from the militant group.

Hours later, militants in the Gaza Strip fired two makeshift Quasar rockets into the southern Israeli town of Sderot. The army said one hit a college campus and the other damaged an unoccupied firetruck. No casualties were reported.

Source: CD/Agencies