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Israel had expected to release dozens of Palestinians held in Israeli jails as part of the cease-fire deal.
Hamas released four female Israeli soldiers held in Gaza as part of a ceasefire agreement, handing them over to Red Cross officials in Gaza City's Palestine Square.
In exchange for the second prisoner release on Saturday, Israel is expected to release 200 Palestinians held in Israeli prisons.
Before the exit, dozens of masked Hamas and Islamic Jihad fighters gathered in the square, where a large crowd of Palestinians gathered.
In addition to hundreds of Hamas members, other Palestinian factions, including Palestinian Islamic Jihad, are also present at the site.
Representatives of the Red Cross and a Hamas fighter were seen signing documents before the release.
Hamas identified the four Israeli soldiers as Karina Riev, Daniela Gilboa, Naama Levy and Liri Albagh. The four captives, who were in Israeli military uniforms, waved to the crowd as they were released.
Ibrahim Al Khaliji, reporting for Al Jazeera from Palestine Square, described the release as a “historic moment”.
In Tel Aviv, a crowd cheered as they watched the release on a big screen.
As part of the deal, Israeli forces are also expected to withdraw from the Nezarim corridor, allowing hundreds of thousands of displaced Palestinians to return to their homes in northern Gaza.
Israel is also expected to open the Rafah border crossing to the south for more humanitarian aid and other commercial supplies to enter.
Al Jazeera's Hind Khoudary, reporting from Gaza's al-Buray refugee camp, said many Palestinians considered Saturday's prisoner exchange more important because it would pave the way for their return to northern Gaza.
More to follow…
