JERUSALEM – Israeli Prime Minister Ariel Sharon on Sunday approved the release of 170 Palestinian prisoners, calling it a “gesture of goodwill” toward Egypt for recently freeing an Israeli businessman jailed on spying charges.

The mass Palestinian release – the first by Israel since January – also appeared aimed at boosting interim Palestinian leader Mahmoud Abbas, who is running in the Jan. 9 presidential elections. The prisoners will be released early next week, according to a statement from Sharon’s office.

There was no immediate reaction from Egypt. But Palestinian officials, who have long demanded release of the estimated 7,000 Palestinians in Israeli custody, dismissed it as a publicity stunt.

“It’s a drop in a big ocean. By the time they release the 170, I bet they will have arrested 170 more,” said Hasan Abu Libdeh, chief of staff to Palestinian Prime Minister Ahmed Qureia. “It’s not going to be a serious event in the Palestinian life, although we appreciate the release of any prisoner.”

Meanwhile, negotiations between Sharon’s hawkish Likud party and the more-liberal opposition Labor Party to form a coalition government continued late Sunday. The alliance, which may be formalized as early as Monday, will increase Sharon’s political power to withdraw settlers and soldiers from the Gaza Strip, as he has proposed doing next year.

As for the Palestinians’ reaction to the prisoner release, Sharon adviser Zalman Shoval said: “If Palestinians see this as a gesture, that’s fine.”

Yet Palestinians seemed likely to respond even more negatively than that, given that the Israeli release in August 2003 of almost twice as many Palestinian prisoners engendered more anger than support among ordinary Palestinians.

Many Palestinians complain that Lebanon’s Hezbollah militants are better able to get Israel to release prisoners.

In a January 2004 deal with that group, Israel released 400 Palestinian prisoners in exchange for an Israeli hostage and the remains of three soldiers.

Many Palestinians in Israeli custody are accused of threatening Israeli security. Sharon’s government has steadfastly refused to release anyone it deems actively involved in attacks against Israelis.

But a recent thaw in the icy relations that Israel shares with its western neighbor, Egypt, prompted Sharon to consider the release of Palestinian prisoners.

Egypt has long sought a more dominant role in Israeli-Palestinian peace negotiations. Sunday’s gesture was precipitated by the release this month of Israeli textile engineer Azzam Azzam, who had served eight years in an Egyptian jail on a spying conviction.

Some Israelis also opposed the impending release.

“The Israeli government doesn’t need to be part of the release of people who tomorrow will kill more Jews,” Israeli parliament member Gilad Erdan, who belongs to Sharon’s right-wing Likud party, told Israeli TV Channel One news Sunday night.

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News of the impending prisoner release came as Israel ended its two-day military incursion into the Khan Yunis refugee camp in the southern Gaza Strip that killed 11 Palestinians and destroyed nearly 40 homes, according to a United Nations count. Israeli army officials insisted that they targeted only homes used by militants.

The raid followed dozens of Palestinian mortar and rocket attacks that killed a Thai worker in a Jewish settlement near Khan Yunis and injured 17 other people.

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(c) 2004, Knight Ridder/Tribune Information Services.