Lebanon observes total shutdown on Wednesday to welcome Lebanese prisoners slated to be freed by Israel.
A statement issued by Prime Minister Fouad Saniora said the shutdown includes government offices, shops, businesses, banks as well as municipalities and educational institutions.

Hizbullah and Israel were to carry out a prisoner exchange on Wednesday, two years after a devastating war sparked by the capture of two soldiers who could return home in coffins.

While the mood in Israel was somber, with a tense wait to discover the fate of its soldiers, Ehud Goldwasser and Eldad Regev, included in the swap, Hizbullah has prepared a hero's welcome for its fighters.

Celebratory banners and flags have been hoisted the length of the main coastal highway from the border with Israel at Naqoura to Lebanon's southern port city of Sidon.

Among those being exchanged is Samir Qantar, a Lebanese Druze who with five life terms for murder became the longest-serving Arab prisoner in Israel.

Four Hizbullah fighters captured in the July-August 2006 war which killed more than 1,200 people in Lebanon and 160 in Israel -- Khaled Zidan, Maher Kurani, Mohammed Srour and Hussein Suleiman -- were also to walk free.

The exchange was to take place at the Naqoura-Rosh Hanikra crossing at around 0600 GMT after DNA tests are carried out to confirm the identities of the two soldiers before the swap goes ahead.

In return for its two soldiers, the Jewish state was also to transfer to Lebanon the remains of 199 Palestinian and Hizbullah fighters, exhumed over the past week.

On Tuesday, Hizbullah's commander in south Lebanon, Sheik Nabil Kaouk, called the swap an "official admission of defeat" for Israel.

Hizbullah supporters have set up a makeshift stage in Naqoura, where a brief ceremony will be held. An official ceremony will follow at Beirut Airport and will be attended by President Michel Suleiman, Prime Minister Fouad Saniora and Parliament Speaker Nabih Berri.

The U.N.-brokered swap is the eighth between Israel and Hizbullah since 1991.

Israel's Jerusalem Post newspaper has billed the festivities in Lebanon, where the released men were to be flown to Beirut to be greeted by Suleiman and Saniora, as "a celebration of evil."

The International Red Cross -- using trucks ferried in from Jordan -- was organizing the exchange, after an accord sealed by a U.N.-appointed German mediator, Gerhard Konrad, following months of tough negotiations.

Hizbullah, which is backed by Tehran and Damascus, has never disclosed the fate of Goldwasser and Regev, although Israeli Prime Minister Ehud Olmert said they are dead.

The families of Goldwasser and Regev will not be present at the border post of Rosh Hanikra on the Israeli side when the swap takes place.

Instead, army officials will inform the families on the soldiers' fate, as the army prepares for military funerals on Thursday in their home villages if their deaths are confirmed.

The daily Al-Akhbar, which is close to Hizbullah, said one of the two Israelis was definitely killed during his capture in a cross-border raid on July 12, 2006 but the condition of his comrade was uncertain.

Israel's cabinet gave the final go-ahead on Tuesday for the prisoner swap.

President Shimon Peres later the same day pardoned the five Lebanese, saying it was "not a happy day for having to free such murderers but we have a moral responsibility to bring our soldiers home."

The cabinet first approved the swap deal in June, but was asked to endorse it again after Israel received a Hizbullah report on missing airman Ron Arad.

Arad has been missing since his plane was shot down over Lebanon in 1986 during that country's civil war, and although the report said he was probably dead, Israel has rejected its findings.

Hizbullah chief Sayyed Hassan Nasrallah was to give a speech in Beirut's Shiite southern suburbs later on Wednesday to hail his group's success in emptying Israeli jails of Lebanese prisoners.(Naharnet-AFP)