Hezbollah fighters killed three Israeli soldiers and seized two more in a cross-border raid on July 12, provoking a fierce Israeli response resulting in 34 days of fierce fighting in Lebanon.

"We did not think, even one per cent, that the capture would lead to a war at this time and of this magnitude. You ask me, if I had known on July 11 ... that the operation would lead to such a war, would I do it? I say no, absolutely not," Sayyed Hassan Nasrallah said in an interview with Lebanon's New TV station.

Prisoner swap

Nasrallah also said "contacts" for negotiations on a prisoner swap between Israel and Hezbollah had already begun.

"The Israelis have acknowledged that this [issue] is headed for negotiations and a [prisoners] exchange," he said. "Contacts recently began for negotiations."

He said that Italy and the United Nations had expressed interest in helping to mediate.

He did not specify in which capacity Italy had expressed interest - on its own or as a mediator for Israel.

Nasrallah said Nabih Berri, the Lebanese parliament speaker, was in charge of the negotiations.

Italian involvement

The Israeli newspaper Haaretz has said Israel was willing to discuss an exchange.
   
However, an Israeli official said on Sunday: "There are no negotiations over the exchange of prisoners."

Massimo D'Alema, the Italian foreign minister, said on August 24 that he did not know about any "secret" talks to free the captives.

But the head of Italy's senate defence committee, Sergio De Gregorio, has said Iran, which backs Hezbollah, wants Italy to be involved. He said Iran's national security chief, Ali Larijani, had told him personally that he would ask Hezbollah to negotiate with Italy.

The senator told Reuters on Sunday that he expected the talks to begin this week. He said the Israeli hostages were "still alive, fortunately", but declined to discuss their condition.

UN deployment

The Hezbollah leader also said that UN troops preparing to deploy in southern Lebanon would not encounter any problems as long as their mission did not involve disarming his fighters.
  
"We have no problem with Unifil [UN Interim Force in Lebanon] as long as its mission is not aimed at disarming Hezbollah," Nasrallah said in the interview.
  
His comments came on the eve of a visit to Beirut by Kofi Annan, who was to discuss with Lebanese leaders the deployment of around 15,000 UN troops in southern Lebanon and related security matters.
  
Nasrallah said he would welcome a meeting with the UN secretary-general and that contacts had been made towards that end, but he said that nothing had been finalised for security reasons.

No second round

Nasrallah told New TV that he did not believe the Jewish state was preparing for a second round of conflict.

"If the Israelis intended a second round, then they should reinforce their positions and presence (in south Lebanon) ..., not withdraw them," he said.

"Their displaced people are going back and they have started to rebuild the north. Someone who acts like that doesn't seem to be going to war. We are not heading to a second round."