An Israeli official said on Thursday that a preliminary agreement had been reached that foresees the full restoration of diplomatic links.

As part of the deal, Israel is to establish a compensation fund to address the killing of 10 Turks by Israeli marines who stormed a pro-Palestinian activist ship, the Mavi Marmara, in 2010. The crew aboard the vessel had been seeking to land on the Gaza Strip, breaking an Israeli blockade of the territory.

The agreement was also said to include a Turkish promise to prevent senior Hamas operative Saleh Aruri from entering its territory.

According to the official, Israel was represented by Mossad chief Yossi Cohen and Netanyahu's official in charge of reconciliation with Turkey, Joseph Ciechanover. Turkey's Feridun Sinirlioglu, an undersecretary with the foreign ministry, represented Anakara.

Two other sources familiar with the negotiations confirmed the details.

A full signing of the agreement is expected "in coming days," one source told the AFP news agency.

Help from a mutual friend

Relations between the two countries - both key allies for the US in the region - broke down in the wake of the raid, and Washington has been involved in trying to patch up their differences.

Turkish President Recep Tayyip Erdogan on Monday hinted that a warming of ties was in the cards, saying that an improvement in relations between the two countries would benefit the region as a whole.

Erdogan said that for a normalization of relations to be possible it would be necessary to reach a deal on compensation for the storming of the ship in 2010 - as well as to agree a lifting of the Gaza embargo.

"There is so much that we, Israel, Palestine and the region can gain from such a normalization process. The region is in need of this," Erdogan said.

News of the deal emerged hours after Netanyahu signed a major natural gas deal - with a consortium that includes US firm Noble Energy - aimed at tapping deposits below the Mediterranean.

rc/jm (AFP, AP, Reuters)