WRAPUP 10-Netanyahu hints new negotiations under way to recover Gaza hostages

* LATEST DEVELOPMENTS:

* Source says Israeli and Qatari officials met in Europe

* Netanyahu says offensive helped clinch November hostage releases

* Meeting comes after Israelis mistakenly killed three hostages

* Hamas not open to talks on prisoners unless aggression stops

* Israel struck YMCA HQ sheltering hundreds -Palestinian officials

* Khan Younis hospital received 20 dead overnight - officials

By Nidal al-Mughrabi, Ibrahim Abu Mustafa and Dan Williams CAIRO/GAZA/JERUSALEM, Dec 16 (Reuters) -

Israeli Prime Minister Benjamin Netanyahu appeared to confirm on Saturday that new negotiations were under way to recover hostages held by Hamas, after a source said Israel's intelligence chief met the prime minister of Qatar, a country mediating in the Israeli-Palestinian conflict. In a televised press conference a day after Israeli forces mistakenly killed three of more than 100 hostages held by Hamas, Netanyahu called the conflict an existential war that must be fought until victory, despite pressure and costs, and said Gaza would be demilitarized and under Israeli security control.

He said Israel's offensive in Gaza had helped clinch a partial hostage-release deal in November and vowed to maintain intense military pressure on Hamas, the militant group that runs Gaza and that he has vowed to destroy. "The instruction I am giving the negotiating team is predicated on this pressure, without which we have nothing," he said.

Netanyahu spoke after the head of Israel's Mossad spy agency, David Barnea, met Qatari Prime Minister Mohammed bin Abdulrahman Al Thani in Europe late on Friday, according to a source with knowledge of the matter, and attention turned to a possible new Gaza truce and a prisoner and hostage deal. Netanyahu sidestepped a question about the meeting, but confirmed he had given instructions to the negotiating team.

"We have serious criticisms of Qatar ... but right now we are trying to complete the recovery of our hostages," he said, alluding to the gas-rich Gulf state's ties to Hamas and Israel's arch-foe Iran. A Hamas statement, said the group "affirms its position not to open any negotiations to exchange prisoners unless the aggression against our people stops once and for all," adding: "The movement communicated this position to all mediators."

Israel bombarded targets across Gaza on Saturday, but two Egyptian security sources said Israeli officials now appeared more willing to work towards a ceasefire and an exchange of Palestinian prisoners for Israeli hostages held by Hamas. Israel's counterattack on Gaza - after a surprise cross-border assault on Oct. 7 in which Hamas militants killed 1,200 people and captured 240 hostages - has killed close to 19,000 people, according to Gaza health authorities. Thousands more are feared buried under rubble.

An Israeli military official said the three hostages killed had been holding a white flag, according to an initial inquiry. Their deaths have put increased pressure on Netanyahu to find a way to secure the release of those held. As Netanyahu spoke, several hundred people staged a protest in Tel Aviv, with some holding placards, including one saying "get them out of hell." A speaker shouted: "Bring them home now!"

The meeting in Europe was apparently the first between senior officials from Israel and Qatar, which has been acting as a mediator, since the collapse of a seven-day ceasefire in late November. Combat has intensified in the past two weeks since the truce, which had allowed dozens of Israeli hostages held in Gaza to be released in exchange for Palestinian prisoners in Israel.

Israeli targets across Gaza on Saturday included a crowded YMCA building, Palestinian health officials reporting dozens killed or wounded, despite a renewed U.S call to scale down the campaign and focus on Hamas leaders. The YMCA has been sheltering hundreds of displaced people.

Two Christian women who had taken refuge in a church complex were shot dead by an Israeli soldier, Roman Catholic Church authorities said. Seven other people were shot and wounded. There was no immediate comment from the Israeli military. In Khan Younis in Gaza's south, Palestinian health officials said the Nasser Hospital had received 20 Palestinians killed in air strikes overnight, in addition to dozens of wounded, including women and children.

The Israeli military said it was "operating to dismantle Hamas military and administrative capabilities". The official Palestinian news agency WAFA said at least three dozen people had been killed in strikes on three houses in the Jabalia refugee camp, which health officials were unable to confirm.

The Israeli military said on Saturday it had bombed a building in Jabalia from the air after its forces came under fire and Hamas militants were seen on the roof. At nightfall on Saturday, residents reported intensified fighting in the centre of Khan Younis, with Israeli planes and tanks bombing and shelling and the sound of rocket grenades, apparently fired by Hamas fighters.

Mohammad, 40, a resident of Khan Younis who has moved to the southern city of Rafah following Israeli evacuation orders, told Reuters by phone: "We want a full ceasefire, an end to the war and not a humanitarian pause." U.S. URGES ISRAEL TO NARROW ITS CAMPAIGN

U.S. President Joe Biden's national security adviser, Jake Sullivan, has urged Israel to scale down its Gaza campaign and transition to more narrowly targeted operations against Hamas leaders, U.S. officials said. With Israeli officials publicly emphasising they would continue the war until they eradicate Hamas, Washington appeared to acknowledge disagreement. Sullivan said the timing was under "intensive discussion" between the allies.

The three hostages were killed in an area of intense combat where Hamas militants operate in civilian attire and use deception tactics, the Israeli official said, but the hostages were fired upon against Israel's rules of engagement. Israel, which said it recovered the bodies of three other hostages killed by Hamas, believes around 20 of more than 130 hostages still held in Gaza are dead.

The Israeli military also said it had killed militants holed up in two school buildings in Gaza City, and raided apartments in Khan Younis stocked with weapons, uncovering what it described as underground infrastructure used by Hamas. "Every day the situation gets worse. Food gets less, water gets worse; only death, fear and destruction get greater," said Samira, 40, a mother of four, who is displaced in Rafah, near the southern border with Egypt.

In signs of the wider ramifications of the conflict, Yemen's Iranian-backed Houthis said they had attacked the Israeli Red Sea resort of Eilat with a swarm of drones, one of several drone incidents reported in the region on Saturday. Two major freight firms said they would avoid the Suez Canal as the Houthis stepped up attacks on commercial vessels in the Red Sea.

The U.S. Central Command said the destroyer Carney had shot down 14 Houthi drones in the Red Sea. Britain also said one of its warships had shot down a suspected attack drone targeting merchant shipping.

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