Israeli air strike kills two Hamas militants

Israel killed two Hamas militants in its first air strikes on the Gaza Strip since pulling troops out of the territory two weeks ago and vowed a crushing response to Palestinian missile salvoes.

The worst surge of violence since Israel's pullout after 38 years of occupation was a blow to hopes the withdrawal could spur peacemaking and may make it harder for Prime Minister Ariel Sharon to beat back a rightist leadership challenge.

Israeli forces massed near the border with Gaza and Defence Minister Shaul Mofaz said a ground offensive was being considered after militants fired at least 35 rockets into the Jewish state, hurting four civilians.

The army said it targeted two vehicles in Gaza City carrying munitions and Hamas militants. Relatives identified the two dead as Hamas men. The Palestinian interior ministry revised an earlier report of four dead.

Gaza militants said their missile strikes on Israel were retaliation for a blast that killed 15 people at a Hamas rally on Friday.

But Israel denied responsibility for that explosion and the Palestinian Authority said it appeared to have been an accident caused by Hamas members carrying explosives. Earlier on Friday, Israeli troops killed three West Bank gunmen.

The surge of bloodshed left a bitter taste for Gazans still celebrating the final Israeli troop withdrawal on September 12.

Vowing vengeance, the military wing of Hamas said it was "time to strike with all our might". The group has largely followed a truce that President Mahmoud Abbas agreed with Israel in February and which helped smooth the pullout from Gaza.

In a Defence Ministry statement, Mofaz called for further strikes against Hamas and Islamic Jihad weapon-making sites in Gaza and the West Bank. Sharon was to convene his security cabinet later yesterday to discuss options.

The army sealed off the West Bank and Gaza yesterday, denying entry to Palestinians allowed to work in Israel.

Egypt called on both parties to stop the escalation. Foreign Minister Ahmed Aboul Gheit urged Palestinian factions to keep the truce. Criticising Israel, he described the bombing of the strip as a violation of international law.

The violence could complicate matters for Sharon ahead of this week's vote by his Likud on holding party primaries early. Rival Benjamin Netanyahu says Sharon's aim of "disengaging" from conflict with the Palestinians by pulling out of Gaza was a mistake that would reward militants and encourage attacks.

If Likud votes for early primaries, it could prompt Sharon to leave the party and form a new centrist alliance. The Likud meeting starts today and a vote is set for tomorrow with results expected late in the day.

Polls during the week showed the result of the vote as too close to call, although Netanyahu had a small lead over Sharon.