BEIRUT (Reuters) - The Lebanese guerrilla group Hezbollah said Italy was trying to play a part in negotiations on a prisoner exchange between Israel and Hezbollah, and an Italian senator said talks could begin this week.

"Contacts recently began for negotiations. It seems that Italy is trying to get into the subject. The United Nations is interested and the negotiations would be through (parliamentary speaker Nabih) Berri," Hezbollah leader Sayyed Hassan Nasrallah told New TV in an interview which was to be broadcast on Sunday.

Hezbollah has been holding two Israeli soldiers since July 12. It caught them in a cross-border raid and wants to exchange them for some of the thousands of Arabs in Israeli prisons.

The operation led to one month of war between Israel and Hezbollah, which controlled large parts of south Lebanon. More than 1,300 people were killed, mostly Lebanese civilians.

Italian Foreign Minister Massimo D'Alema said on Aug. 24 he did not know about any "secret" talks to free the captives.

But the head of Italy's senate defense committee, Sergio De Gregorio, has said Iran 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 he expected the talks to begin this week. He said the Israeli hostages were "still alive, fortunately", but declined to discuss their condition.

Germany negotiated an exchange of prisoners between Israel and Hezbollah in 2004, and has said it is willing to play a similar role now.

"Germany also wants to be involved, so we should verify what (the situation) is, what will be decided on a European level," De Gregorio said.

The Israeli newspaper Haaretz has said Israel is willing to discuss an exchange.

Provocations

Separately, Nasrallah told New TV that Hezbollah would ignore Israel's provocations and that he did not believe it was preparing for a second round of conflict.

He said Israel was trying to press new demands such as the deployment of UN forces at Beirut airport, at Lebanese ports and on Lebanon's border with Syria. But he added: "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."

New TV, a privately owned Beirut station, released excerpts from the interview in advance of broadcast later on Sunday.

Israel tried to destroy Hezbollah’s military infrastructure in Lebanon but the Shiite Muslim movement was able to slow down its attempts to advance on the ground and to keep firing rockets into Israel until the truce began.

Nasrallah said Hezbollah reserved the right to attack any Israeli forces inside Lebanese territory but would show restraint for the time being.

"If we answered provocation, we would have violated UN (truce) resolution 1701 and this could open the debate on a second resolution, which (U.S. President George W.) Bush wants and which is connected with disarming the resistance," he said.

Hezbollah says it does not intend to disarm but Nasrallah said its guerrillas would not carry weapons in public when the Lebanese army and UN forces move into the south.

On Israel's massive response to the July 12 raid, he said Hezbollah had not expected one percent of it. "If I had known that the operation to capture the soldiers would lead to this result, we would not have carried it out," he said.