Israel expands Gaza campaign as militants fire rockets

By Nidal al-Mughrabi

GAZA (Reuters) - Israel Monday expanded its fiercest air offensive in the Hamas-ruled Gaza Strip in decades and prepared for a possible ground assault, after a three-day bombardment which has killed more than 300 Palestinians.

Rockets fired by Islamist militants in Gaza killed three Israelis, two after nightfall in less than an hour, increasing pressure on the government as the army amassed infantry and armored forces along the border.

The Palestinian toll from the onslaught rose to 335 dead and 800 wounded, medical officials in Gaza said. A United Nations agency said at least 62 of the dead were civilians.

"We have an all-out war against Hamas and its kind," Israeli Defense Minister Ehud Barak told parliament, using a term he has employed in the past to describe a long-term struggle against Israel's Islamist enemies.

Broadening their targets to include the Hamas government in the Gaza Strip, Israeli warplanes bombed the Interior Ministry, which supervises 13,000 members of the group's security forces. The building had been evacuated and there were no casualties.

The planes also attacked the homes of two top commanders in Hamas's armed wing. They were not home, but several family members were among the seven dead.

Hamas, an Islamist movement that took over the Gaza Strip in 2007, defied the Israeli assaults, the fiercest in the coastal territory since the 1967 Middle East war.

Rocket fire from Gaza at Israel intensified immediately after Hamas declared the end of a truce on December 19.

With six weeks to go to an election that polls suggest the more hawkish right-wing Likud party will win, Israel's centrist government says the offensive aims to put a stop to the rockets.

Four Israelis have been killed by rockets since the offensive began Saturday.

GROUND INCURSION?

Israel declared areas around the Gaza Strip a "closed military zone," citing the risk from Palestinian rockets, and ordered out journalists observing a build-up of armored forces.

Excluding the press could help Israel conceal preparations for a ground incursion following air strikes that have turned buildings to rubble and left hospitals struggling to cope.

Wounded Gazans trickled one by one into Egypt and 10 trucks carrying medical supplies were allowed to cross into the blockaded territory. Border officials said about 30 Palestinians were expected to leave for treatment.

Israeli markets largely shrugged off the conflict, and stock indices rose 0.7 to 0.9 percent Monday, after losing 1.5 percent Sunday, the day after the attacks on Gaza began.

Oil prices rose above $40 a barrel Monday, boosted by the weak dollar and the Gaza violence, which served as a reminder of tensions that could threaten crude supplies from the region.

Most Gazans in the territory of 1.5 million people, one of the most densely populated areas on earth, stayed at home, in rooms away from windows that could shatter in blasts from air strikes on Hamas facilities. Residents of southern Israel ran for shelter at the sound of alarms heralding incoming rockets.

In Khan Younis in the southern Gaza Strip, an air strike killed a local commander of Islamic Jihad, three other members of the militant group and a child as they stood in the street.

Israeli aircraft also destroyed a laboratory building at the Islamic University, a significant cultural symbol in Gaza.

"MANY DAYS"

Mark Regev, a spokesman for Israeli Prime Minister Ehud Olmert, said the offensive would go on until the population in southern Israel "no longer live in terror and in fear of constant rocket barrages."

"(The operation could) take many days," said military spokesman Avi Benayahu.

Hamas spokesman Fawzi Barhoum has urged Palestinian groups to use "all available means" against Israel, including martyrdom operations" -- meaning suicide bombings.

The Gaza operation and civilian casualties have enraged Arabs across the Middle East. Protesters burned Israeli and U.S. flags to press for a stronger response from their leaders.

Palestinian President Mahmoud Abbas, whose writ runs only in the West Bank since his Fatah faction was ousted from Gaza by Hamas last year, had urged Hamas not to end its truce and has effectively accused it of bringing the onslaught on itself.

Nevertheless, Ahmed Qurie, Abbas's chief negotiator, said on Monday that the Palestinians had put on hold U.S.-backed peace talks with Israel, which have anyway made little progress.

U.N. Secretary-General Ban Ki-moon demanded world leaders "use all possible means to end the violence" and "act swiftly and decisively to bring an early end to this impasse."

But U.S. President George W. Bush's administration, in its final weeks in office, demanded Hamas agree to a ceasefire. White House spokesman Gordon Johndroe said the U.S. "understands that Israel needs to take actions to defend itself."

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