Israeli helicopters targeted a well-known Palestinian militant in Gaza on Tuesday, but missed, killing two others instead.
A few hours later, Palestinians fired six homemade rockets from northern Gaza, four of which landed in Israel. Israeli tanks and helicopters responded by firing toward a Palestinian residential area in the northern Gaza Strip, killing three Palestinians and wounding 30, doctors said.
President Bush said he was "troubled" by the Israeli attack against Hamas leader Abdel Aziz Rantisi. Such incidents don't promote Israel's security, Mr. Bush said, and may "make it more difficult for the Palestinian leadership to fight off terrorist attacks."
"I regret the loss of innocent life," Mr. Bush told reporters in the Oval Office.
Palestinian Prime Minister Mahmoud Abbas called it a "terrorist attack" and accused Israel of trying to destroy the "road map" peace plan.
Israel says it is fighting to protect the deal, by removing those who oppose it. Two days ago, Hamas killed four Israeli soldiers in Gaza in an unusual joint raid with Islamic Jihad, and the armed wing of Yasser Arafat's Fatah Party.
Israel said it will keep going after militant Palestinians as long as the Palestinians do not. Prime Minister Ariel Sharon promised to "fight the heads of the extremist terrorist organizations" who send terrorists to kill Jews.
The botched assassination attempt on Rantissi came just as Palestinians were trying to convince the militant group to stop attacking Israel, reports CBS News Correspondent Kimberly Dozier.
Three Israeli Apache helicopter gunships appeared over the skies of Gaza City just before noon Tuesday. In quick succession, they fired seven missiles toward Rantisi's Jeep Pajero as it was driving in a crowded thoroughfare, near a 16-floor apartment building.
The car burst into flames and was reduced to a scorched pile of metal. One of Rantisi's bodyguards and a woman bystander were killed. Rantisi was hit by shrapnel in the leg, arm and chest; his son, three bodyguards and 22 bystanders also were wounded, doctors said.
Within minutes, Palestinians gathered, calling for revenge.
From his hospital bed, Rantisi, a 55-year-old former pediatrician, threatened revenge. "We will continue with our holy war and resistance until every last criminal Zionist is evicted from this land," he told the Arab TV satellite station Al-Jazeera.
Mahmoud Zahar, a Hamas leader and a surgeon who treated Rantisi, said there would be quick retaliation: "The Hamas response will be like an earthquake." Zahar suggested Hamas might retaliate against Israeli politicians.
Israel insists it has kept its part of the peace bargain, by dismantling some Jewish outposts in occupied Palestinian territory. Only a handful have been removed, but Israeli officials say they're in no hurry, after this weekend's violence.
The road map, which foresees and end to the violence and the creation of a Palestinian state by 2005, says Israel must refrain from actions that undermine trust, but does not specifically rule out the targeted killings of Palestinian militants. However, Israel indicated last month it would only use targeted killings as means of last resort to prevent attacks on Israelis.
Despite the growing tensions, Egypt was to press ahead with efforts to persuade Hamas to halt attacks. The Egyptian intelligence chief, Omar Suleiman, was to arrive for the mission in the West Bank on Wednesday, as scheduled. He also reportedly planned to meet with Israeli officials.
Also, Palestinian sources said a dialogue between Hamas and Palestinian officials appeared to have continued despite some Hamas officials' claims that they were pulling out of it last Friday.
As the attack happened, Khader Shkirat, lawyer for jailed Palestinian militant leader Marwan Barghouti and Khaled Mashal, a senior Hamas leader, were meeting in Damascus, Syria, negotiating an end to attacks against Israelis, Shkirat said.
When Rantisi was attacked, Mashal ended the meeting so Hamas could discuss the consequences, Shkirat said.
In an unusually harsh statement, Abbas told Palestinian Satellite TV the strike was a "terrorist attack in the full meaning of the word because it targeted innocent people."
Abbas has been criticized by Palestinians for pledging to end the "armed intefadeh" while getting little in return from Israel. Abbas said Tuesday that he asked the United States to intervene, and said he would continue trying to resume talks with Hamas.
The attacks prompted a flurry of calls Tuesday to Palestinian and Israeli officials from U.S. officials including national security adviser Condoleezza Rice.
Even some members of Sharon's own coalition condemned the attack.
"That was not a wise action," said Ilan Leibovitch, a lawmaker from the centrist Shinui party. "We are not talking about someone who's wearing an explosive belt and is about to blow himself up in Netanya or Tel Aviv, but rather a man who holds a political position."
The attack on Rantisi killed his bodyguard and a 44-year-old woman, said Dr. Moawiya Hassanain, director of Shifa Hospital. In addition to Rantisi, his son, three of his bodyguards and 22 bystanders were wounded, three of them critically.
Thousands of Hamas supporters crowded the courtyard outside Shifa Hospital, chanting slogans against Abbas, also known as Abu Mazen. "Abu Mazen, we want resistance," the crowded shouted.
Dozens of Hamas gunmen fired their assault rifles in the air.