Gaza City (Palestinian Territories) (AFP) - A 72-hour truce between Israel and Hamas teetered on the brink of collapse Wednesday with a rocket hitting the Jewish state just hours before it expired at midnight.

Shortly before the rocket hit, an official told AFP Israel was willing to extend the lull by another three days as the Palestinians expressed hope they could reach a deal in indirect talks brokered by Egypt.

Israel police and the army said the rocket hit an open area near Gaza's northern border shortly after sirens rang out across the south.

But Hamas, Gaza's Islamist de facto rulers, said its militants were not responsible.

"Hamas denies firing any rockets towards the occupation this evening," spokesman Sami Abu Zuhri said in a statement.

The attack jeopardised the hopes of millions who were banking on Egyptian mediators to clinch an agreement after days of frantic shuttle diplomacy between Israeli and Palestinian delegations.

Without agreement on an extension or a long-term truce, the two sides risk a resumption of the deadly fighting, which has killed more than 1,950 Palestinians and 67 on the Israeli side since July 8.