Israel has reimposed a total closure of the Gaza Strip, less than 24 hours after relaxing restrictions on the movement of Palestinians.
Israel released 61 prisoners during Powell's visit
Israeli Army Radio said the decision was taken following warnings of possible suicide attacks inside Israel.
But US Secretary of State Colin Powell, who has been attempting to secure Israeli and Palestinian support for the "roadmap" peace plan for the region, continued to see signs of progress.
At a press conference in Cairo with Egyptian Foreign Minister Ahmed Maher, Mr Powell said there should be less focus on Israel's refusal to use the word "accept" in reference to the peace plan, and more attention turned to what both sides "have in common".
This position was instantly rejected by his Egyptian counterpart, who told reporters that the word accept was "not a very hard word".
"It is not a dirty word. It would be a very useful word."
Mr Maher also spurned US efforts to persuade its allies to sideline Palestinian leader Yasser Arafat and deal solely new prime minister Mahmoud Abbas - also known as Abu Mazen.
"Arafat is the elected leader of the Palestinian people. We will continue to do business with both of them," he said.
The BBC's Jon Leyne, who is travelling with Mr Powell, says he has very little to show from his talks with Israeli and Palestinian leaders.
Mr Powell is due to fly on to Jordan from Egypt for similar talks on the search for a Middle East peace settlement with another of America's closest Arab allies.
He has been holding negotiations as the cycle of violence in the region continues unabated, with two Palestinian militants from the al-Aqsa Martyrs Brigades reportedly killed when Israeli forces moved into the Rafah area of Gaza at dawn on Monday.
In a separate incident, a Palestinian farmer was reportedly shot and killed on his land in Khan Younis in the Gaza Strip by Israeli soldiers guarding a nearby Jewish settlement.
ROADMAP MAIN POINTS
Phase 1 (to May 2003): End of terrorism, normalisation of Palestinian life and Palestinian political reform; Israeli withdrawal and end of settlement activity; Palestinian elections
Phase 2: (June-Dec 2003) Creation of an independent Palestinian state; international conference and international monitoring of compliance with roadmap
Phase 3 (2004-2005): Second international conference; permanent status agreement and end of conflict; agreement on final borders, Jerusalem, refugees and settlements; Arab states to agree to peace deals with Israel
On Sunday, an Israeli man was shot dead when gunmen opened fire on his car near a Jewish settlement in the West Bank.
Before leaving Jerusalem, Mr Powell called on both Israel and the Palestinians for immediate action towards ending the conflict in the Middle East.
But Israeli Prime Minister Ariel Sharon has made clear that there will only be "modest" humanitarian gestures until Abu Mazen's government cracks down on militants.
Before the talks, Israel eased restrictions on Palestinian movements in both the West Bank and Gaza - some of which were later re-imposed, and freed 61 Palestinians held in administrative detention.
But tough decisions on issues such as settlements have been postponed for at least a week until Mr Sharon meets US President George W Bush in Washington.
Abu Mazen says the roadmap represents an opportunity for a real political solution in the Middle East, but insists it must be implemented in full, not selectively.
Israel, he says, must move simultaneously with Palestinian peace efforts.
There are reports in the Israeli media that the two men could meet by the end of the week, and that secret high-level security talks between the two sides had already begun, but these have not been confirmed.
The roadmap - drafted by the US, Russia, the European Union and the United Nations - outlines a process that is supposed to begin with the cessation of Palestinian attacks and Israel's withdrawal from Palestinian territories.
Under the plan, a Palestinian state is due to be established by 2005.