Hospital sources said at least 30 Palestinians, including a 14-year-old boy, were injured in clashes with Israeli troops. The Israeli army said two Israeli women were slightly wounded when stones were hurled at their car near Bethlehem.
The latest violence and the killing of an Islamic militant in a phone booth explosion in the West Bank on Thursday followed U.S.-arranged Israeli-Palestinian security talks earlier in the week that brought no immediate break in a cycle of bloodshed.
"Since the end of September we have been trying to extinguish the Palestinian bonfire and you could say we have not succeeded," said Brigadier-General Ron Kitrey, chief spokesman of the Israeli army.
Tanks fired shells at a Palestinian outpost near the Jewish settlement of Netzarim, where mortar bombs landed overnight, Israel Radio reported. A Palestinian military spokesman confirmed Israeli forces shot at a position of the Force-17 security unit.
Witnesses said the explosions could be heard nearly three miles away in Gaza City.
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The attack drew a swift Israeli response. Missiles fired by helicopters blew out the walls of a Palestinian police station in the village of Beit Lahia in the Gaza Strip, witnesses said.
Palestinian Public Security Chief Major-General Abdel Razek al-Majaydeh said four Palestinian security posts were hit in the second attack by helicopter gunships in Gaza in 48 hours.
The army said its forces had attacked targets in response to mortar fire on villages inside Israel and in Gaza.
At least 369 Palestinians, 71 Israelis and 13 Israeli Arabs have been killed in the Palestinian uprising for independence that erupted in September after both sides failed to clinch a final peace deal in U.S.-hosted negotiations.
As Israel prepared for the week-long Passover holiday, commemorating the biblical exodus of the Israelites from Egyptian slavery, the militant Islamic Jihad group vowed to avenge the killing of one of its West Bank leaders.
Iyad al-Hardan was blown up in a telephone booth which he often used, about 10 yards from a Palestinian prison where he was jailed.
"We affirm to the leaders of the enemy that our struggle persists and that assassinations and liquidations will not affect our march," Islamic Jihad, which has carried out bombings in Israel, said in a statment faxed to Reuters in Beirut.
It said it had fired mortar shells on Nahal Oz, a kibbutz or collective agricultural community, inside Israel in reponse to the killing of Hardan.
Palestinian officials also blamed Israel for Hardan's death, the latest in what they say has been a string of assassinations of Palestinian activists on the front line of the uprising.
Kitrey said the army was not responsible for the West Bank blast, but he did not deny that other Israeli security forces may have had a hand in killing Hardan.
"I did not say that the Israeli army did not know," he told Israel's Army Radio. "I said the Israeli army was not involved."
The 1996 Israeli killing of accused master bombmaker Yahya Ayyash, known as The Engineer, with a booby-trapped cellular phone, triggered a wave of revenge suicide bombings in which scores of Israelis died.
Public Security Minister Uzi Landau said he would call on Israel's cabinet to approve more military operations against Palestinian targets, saying the activities should be "day after day, hour after hour."
"The message has to be clear, that every interest of the Palestinian Authority, anyone who is behind terrorism, or sends them, or pulls the trigger himself has to know they are not immune," Landau told Israel Radio.
The United States rebuked Israeli Prime Minister Ariel Sharon's new government on Thursday over its latest plans to expand Jewish settlements in the occupied West Bank and Gaza.
Using unprecedented harsh language, U.S. State Department spokesman Richard Boucher condemned Israel for a settlement policy that he said amounted to playing with fire.
Sharon's administration said on Thursday it would auction off West Bank land for the building of 700 more Jewish homes. Under international law, settlements are illegal.
"This is provocative and we have consistently encouraged both sides to refrain from provocative acts," Boucher said.
Nearly 300 U.S. lawmakers urged President George W. Bush to reassess U.S. relations with the Palestinians, whom they blamed for the upsurge of violence in the Middle East.
A coalition of 87 Senators and 209 House members told Bush in a letter to reassess aid to the Palestinians and whether their office in Washington should remain open.
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