JERUSALEM Israel handed over a convicted Hezbollah spy to Lebanon on Sunday, and in a surprise move the Islamic guerrilla group turned over what it said were the body parts of Israeli soldiers killed in a 2006 war.
The Hezbollah gesture, along with recent comments by its leader, signaled that a larger prisoner exchange could be in the works between the two bitter enemies.
Israel said publicly that Sunday's exchanges were unrelated to a deal that would include Israel releasing the longest-serving Lebanese prisoner and Hezbollah setting free two soldiers captured in a 2006 cross-border raid that sparked a monthlong war.
But a senior Israeli military official, speaking on condition of anonymity because of the sensitivity of the talks, said a deal was in the making, even though there was no timetable for completing it.
Israeli authorities released Nasim Nisr, an Israeli of Lebanese descent after he completed a six-year sentence for espionage and drove him from a prison in central Israel to the northern Rosh Hanikra crossing.
Hezbollah official Wafik Safa told the group's al-Manar TV station that it handed over a brown box containing what it said were the remains of Israeli soldiers killed in the war.
Nasrallah has boasted in the past that he holds the arms and legs of Israeli soldiers.
The Israeli army said the remains would undergo forensic examination.
Helge Kvam, a Red Cross spokesman in Jerusalem, called Hezbollah's move a "complete surprise," and the Israeli military said the move was not coordinated.
Hezbollah leader Hassan Nasrallah predicted last month that Israel would soon release prisoners it is holding, and German mediators have been trying to work out a swap for months.
Israel is believed to be holding seven Lebanese prisoners, including Samir Kantar, who has been in an Israeli prison since he was convicted of killing an Israeli family in 1979.
Hezbollah has been holding soldiers Udi Goldwasser and Eldad Regev since July 2006. The soldiers are believed to have been badly wounded during their abduction, and Hezbollah has offered no proof that they are alive.
A larger prisoner swap would end a difficult chapter for Israel. The two captive soldiers have become symbols of what is widely seen as a failed war, and their families have become prominent figures as they travel the world pushing for the return of their loved ones.
Even if the deal does goes through, it is unlikely to temper the animosity between Israel and Hezbollah, which, with Iranian backing, remains committed to the destruction of the Jewish state.
In Beirut, German Foreign Minister Frank-Walter Steinmeier said Sunday's exchanges were "preliminary steps" that "created a positive dynamism" in the secret talks between the sides.
The release of Kantar would be particularly difficult for Israelis to accept.
He is serving multiple life sentences for infiltrating northern Israel in 1979 and killing four Israelis a 28-year-old man, the man's 4-year-old daughter and two Israeli policemen.
Kantar repeatedly smashed the young girl's head against a rock and crushed her skull with a rifle butt. Her mother, while trying to silence the cries of her other daughter, accidentally smothered the 2-year-old.
In the past, Israel has traded hundreds of prisoners is return for a single captive soldier.
Boaz Ganor, a leading terrorism expert in Israel, said this policy is misguided because it provides a moral victory for the enemy and provides them no incentive to keep prisoners of war alive.
"I think it is a mistake to release living prisoners for dead ones," he said. "I think this should be an ironclad rule, especially when we are talking about an arch-terrorist like Kantar ... I think Israel should not cross this line."
Nisr was convicted in 2002 of espionage. He admitted in a plea bargain to passing information to a senior Hezbollah officer.
Hezbollah released dozens of white pigeons and yellow balloons Sunday to mark his return and was quick to tout it as another victory.
Arriving in the southern coastal town of Naqoura, Nisr grinned and flashed the victory sign as he was showered with rice and rose petals by throngs of cheering supporters.
Nisr said his release was part of an exchange deal between Israel and Hezbollah.
"Congratulations to Lebanon and congratulations to Sayyed Hassan Nasrallah. God willing, we will very soon witness the return of all Lebanese prisoners to Lebanon," he told a crowd of Hezbollah followers.
Nisr's release was expected to boost the militant group's standing at home and comes on the heels of an Arab-brokered agreement signed in Qatar last month that gave Hezbollah some of its key demands that had long been rejected by the Western-backed government.
Nisr, 39, was born in Lebanon to a Jewish Lebanese mother and a Shiite Muslim father. Because of his Jewish ancestry, he qualified for Israeli citizenship and moved to Israel. He has a 10-year-old son from a first marriage, and two daughters, ages 10 and 7, with his current wife.
AP correspondents Zeina Karam in Naqoura, Lebanon, and Ariel Schalit in Rosh Hanikra, Israel contributed to this report.