Palestinian militants handed three Israeli hostages over to the Red Cross on Saturday, while buses carrying freed Palestinian prisoners rolled out of two Israeli jails in the latest exchange under an ongoing Gaza truce deal.

Reporters saw masked Hamas militants parade the hostages onto a stage in Gaza's southern city of Khan Younis, where they were told to address the crowd before their handover to the Red Cross.

Clutching gift bags given by their captors and a certificate to mark the end of their captivity, the three men, flanked by fighters, called for the completion of further hostage exchanges under the ceasefire deal.