Palestinian President Mahmoud Abbas suspended peace negotiations with Israel on Sunday, demanding it end a Gaza offensive that has killed more than 100 Palestinians, many of them civilians.
Israel said it was acting in self-defence in the Hamas-controlled Gaza Strip to curb constant cross-border rocket attacks by militants and threatened to intensify its ground and air campaign despite allegations it was using excessive force.
Abbas had ordered "the suspension of negotiations ... until (Israeli) aggression is stopped", a senior aide to the Palestinian leader said in the West Bank city of Ramallah. But Abbas stopped short of declaring dead the US-brokered statehood talks opposed by Hamas who seized control of the Gaza Strip from his Fatah movement in June.
The United States later called for an end to the violence and a resumption of negotiations. "The violence needs to stop and the talks need to resume," White House spokesman Gordon Johndroe said. Israeli Prime Minister Ehud Olmert told his cabinet: "Israel is interested in negotiations but not at the price of giving up our right to protect Israeli citizens".
US Secretary of State Condoleezza Rice is due to meet Abbas and Olmert this week. Washington has said it hoped Israeli-Palestinian talks can lead to a statehood deal before President George W. Bush leaves office in January.
A 21-month-old Palestinian girl, two other civilians and three militants were killed in the latest fighting in the Gaza Strip, raising the Palestinian death toll in five days of bloodshed to more than 100, including about 60 civilians, medical officials said.
Anti-Israeli demonstrations erupted in the occupied West Bank, where Israeli forces confronting stone-throwers near the town of Hebron shot dead a 14-year-old boy wearing a Hamas headband, witnesses said.
More than 10 rockets slammed into southern Israel, wounding four people, Israeli ambulance workers said. For the first time since the surge of violence began, Fatah militants in the Gaza Strip said they launched salvoes across frontier.
"Israel has no intention of stopping the fight against the terrorist organisations even for a minute," said Olmert, who faces the new challenge of long-range rockets striking the major southern city of Ashkelon, where a house was hit on Sunday.
Israel has sent tanks and other armoured vehicles as well as special forces and front-line infantry units into the Gaza Strip, but has released no precise troop figures. Earlier, UN Secretary-General Ban Ki-moon accused Israel of using "excessive force". He demanded a halt to air and ground attacks that killed 61 people on Saturday, the bloodiest day for Palestinians since the 1980s, and militants' rocket salvoes.
European Union president Slovenia condemned Israel's attacks as disproportionate and violating international law. The presidency statement also called for an immediate halt to the rocket fire.
Abbas designated Sunday a day of mourning. One Israeli has been killed by a rocket launched from Gaza since the current surge in bloodshed began. Hamas has said such salvoes would stop if Israel abandoned operations in the Gaza Strip and raids against militants in the occupied West Bank.
"We are acting to hit the Hamas infrastructure ... the final target is to bring an end to the firing of Qassams," Defence Minister Ehud Barak said about the crude rockets.
"This will not be achieved in the next two days, but we will continue the activity with all our strength. And we need to prepare for escalation, because the big ground operation is real and tangible," Barak said.
Meeting in emergency session, the UN Security Council said it was deeply concerned about civilian deaths in southern Israel and the Gaza Strip and urged a cessation of violence.
"We are capable of sustaining the fight and tolerating (attacks) beyond the expectations of the enemy," said Abu Ubaida, spokesman of Hamas's Izz el-Deen al-Qassam Brigades. Olmert has been under pressure from some of his cabinet members to launch a broader offensive in the Gaza Strip, especially after militants began firing longer-range Katyusha rockets at Ashkelon, a city of 120,000 people.
But Israeli officials have spoken publicly of the heavy loss of life such a campaign could cause on both sides. Two Israeli soldiers were killed in fighting with Gaza militants on Saturday.
"I am ashamed to say they have succeeded in chasing us away," said an Ashkelon resident, who gave his name only as Avy, after a rocket smashed through the roof of his house, causing extensive damage. No one was hurt.
Across the Gaza Strip, passages from the Koran echoed from mosque loudspeakers and families erected traditional mourning tents for the dead.
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