The air strike triggered threats of revenge by militants and made it harder for the beleaguered Abbas to rescue a fragile truce. In the past, armed groups have fired homemade rockets at Israeli border towns in response, drawing Israeli reprisals that have been particularly harsh since the Israeli pullout from Gaza in September.
Even as tensions rose in Gaza, Israeli and Palestinian negotiators were to meet Tuesday to try to resolve remaining disputes over new security arrangements on the Gaza-Egypt border.
But Israeli Prime Minister Ariel Sharon opened the winter parliament session by warning that the Palestinians must wage a real war on terrorism, and if they don't Israel will, reports CBS News correspondent Robert Berger. "Israel will continue to defend itself and hit the perpetrators of terror," Sharon said.
He reportedly also told the visiting Italian foreign minister that he won't meet with Abbas again as long as Palestinian attacks on Israelis continue.
Earlier Tuesday, Israeli Cabinet ministers approved the deployment of European inspectors at the border, a breakthrough after weeks of slow-moving talks and a major step toward giving the Palestinians freedom of movement without Israeli controls for the first time in four decades.
In other developments:
In Tuesday's airstrike, missiles slammed into a car carrying two top fugitives — Hassan Madhoun of the Al Aqsa Martyrs' Brigades and Fawzi Abu Kara of Hamas. The car was driving on a main north-south road next to the Jebaliya refugee camp when it was hit, and was turned into a twisted ball of metal scraps.
Just minutes earlier, Abbas' convoy had traveled on the road on his way to Gaza City, Abbas' bodyguards said.
Madhoun was involved in rocket attacks on Israel, serving as a coordinator with other militant groups, including Hamas and Islamic Jihad, Israeli officials said. Madhoun also helped plan three bombing attacks that killed 20 Israelis since 2004, including a blast in Israel's Ashdod port, the army said.