Fighting intensified on the northern outskirts of Gaza City yesterday as a Hamas leader warned that the Islamists would kill Jewish children anywhere in the world in revenge for Israel’s devastating assault.

“They have legitimised the murder of their own children by killing the children of Palestine,” Mahmoud Zahar said in a televised broadcast recorded at a secret location. “They have legitimised the killing of their people all over the world by killing our people.”

Mr Zahar made his first appearance since Israel launched its offensive. Dressed in a dark suit, he declared: “Victory is coming, God willing.”

As night fell on the territory, most of which is without electricity, the sky above Gaza was illuminated by explosions and flares from the pitched battle on Gaza City’s northern fringes, where Israeli tanks, helicopters and artillery fought to dislodge Hamas guerrillas. Witnesses said that the battle had, for the first time, spilled into Gaza City itself, where the head of Hamas’s armed wing warned that thousands of his fighters were waiting.

The Israeli military said last night that three of its soldiers were killed and 24 wounded by a shell from one of its own tanks in a battle near Gaza City.

Abu Obeida, the leader of Hamas’s military wing, made his first appearance on Gaza television, his face masked in a red and white scarf, to goad Israeli forces massed outside the teeming city of 400,000 people. “We have prepared thousands of brave fighters who are waiting for you in each corner of the street and will welcome you with fire and iron,” he said.

Despite growing international calls for a ceasefire, neither side has shown the slightest intention of backing down. Israel, supported by the outgoing Bush Administration in the United States, rejected European calls for an immediate ceasefire reiterated during a peace mission by President Sarkozy of France. Israel argues that it needs to break Hamas’s military capacity if a durable ceasefire is to be negotiated. “We cannot accept a compromise that will allow Hamas to fire \ against Israeli towns in two months’ time,” Prime Minister Ehud Olmert told Mr Sarkozy last night.

Hamas, meanwhile, kept firing rockets into southern Israel, launching about 40 of its home-made Qassam rockets and more sophisticated Grad missiles. They again hit Beersheba, about 25 miles from Gaza. While Israeli forces have stormed into the northeastern area of the Strip, from where Hamas usually launches its projectiles, the Islamists have maintained their fire from within Gaza City.

Many analysts believe that Hamas wants to goad Israel into its stronghold, a hellish landscape for urban combat, which the Islamists have had 18 months to prime with booby traps, ambushes and tunnels.

The Israeli newspaper Haaretz reported that Israeli soldiers raided the house of a Hamas militant only to find three tunnels underneath through which their quarry escaped. It added that Hamas’s reports of kidnapping an Israeli soldier stemmed from an incident in which the soldier became separated from his unit and the militants tried to drag him down a tunnel. He escaped after a scuffle, it said.

Mr Sarkozy, part of a high-level EU effort in the region to negotiate a truce, told Israel that “the violence must halt”. Mahmoud Abbas, the Palestinian President and Fatah leader, whom he met in Ramallah yesterday, also called for an unconditional truce.

Mr Sarkozy ran foul of Hamas when he said that it must bear most of the blame for the increasingly miserable plight of the 1.5 million Gazans it rules over. “Hamas acted in an irresponsible and unforgiveable manner . . . Hamas is to blame for the suffering of the Palestinians,” he said. A Hamas spokesman accused Mr Sarkozy of “total bias” towards Israel.

Casualty figures

550 Palestinians have been killed in Operation Cast Lead

100 of the dead are children

2,500 Palestinians have been wounded

4 Israeli civilians have been killed since the operation began, and four Israeli soldiers. Seventy-seven soldiers have been injured

Source: Gaza medical services, Israel Defence Forces

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