Israeli Prime Minister Ehud Olmert said peace talks with moderate Palestinians should go on despite the latest violence in the Gaza Strip. The West Bank-based administration of Palestinian President Mahmoud Abbas said talks would stay suspended during fighting.
On the eve of her visit to the region, Secretary of State Condoleezza Rice called for a quick resumption of negotiations and said she still believes a deal to end the conflict is possible by the end of the year.
"I'm hopeful that we can get through this current situation and get back to negotiations," Rice said from Belgium.
She defined a deal as a framework for an eventual Palestinian state, not a final agreement that resolves all the issues between both sides.
Israel's army withdrew its infantry and tanks from the Gaza town of Jebaliya early Monday after more than two days of fighting, leaving a swath of destruction. Roads had been plowed up, cars crushed by tanks and electric poles toppled.
"There's no word to describe this horrible scene. I can say nothing but that God is greater than the aggressors, and God is going to avenge us," said Sami Asliyeh, who lost two female teenage cousins when a shell struck the family home Saturday.
Israeli troops moved into Jebaliya late Friday as part of a major offensive in response to rocket fire by the Islamic militants of Hamas, which seized control in Gaza last June after five days of fighting with Abbas' supporters.
Recent rocket fire has reached as far as Ashkelon, 11 miles north of Gaza, suddenly putting the city of 120,000 people under daily attack.
Olmert stressed that the offensive would continue.
"We are acting and we will continue to act in a way that is painful and effective, that will bring maximum results in terms of halting terror," he told members of his Kadima Party.
Fighting in Gaza has killed 121 Palestinians and three Israelis since Wednesday, one of the bloodiest spates of violence in more than seven years of clashes. Palestinian medical officials and the Israeli human rights group B'Tselem said at least half the dead were civilians.
Despite the lopsided toll, Hamas claimed victory, and 20,000 supporters joined a celebration in Gaza City. A symbolic contingent of 10 Hamas militants marched with assault rifles and grenade launchers as the crowd waved green Hamas flags.
Hamas strongman Mahmoud Zahar threatened to strike even deeper into Israel if the offensive resumed. "The battle and confrontation will continue and will expand even further than it has reached," he told the crowd.
But despite the public defiance, Zahar told reporters Hamas was pursuing a cease-fire through an unidentified third party - most likely Egypt. He stressed, however, that Hamas would continue to train its men and develop weapons even under a truce.
Israeli leaders have been reluctant to seek cease-fires, arguing Hamas would use any lull to regroup and rearm. But recent opinion polls say roughly two-thirds of Israelis support truce talks, and a growing number of Israeli leaders have said the government should consider the idea.
Late Monday, an Israeli missile struck militants firing rockets from the northern Gaza town of Beit Hanoun, killing one man, Palestinian officials said. A second strike in the same area caused no casualties, they said.
The Israeli military confirmed both strikes, saying the first hit a rocket launch squad and the second struck a donkey cart loaded with rockets.
Gaza militants continued to fire rockets into southern Israel. Israeli rescue workers said three rockets struck Ashkelon, with one hitting an apartment building. No casualties were reported.
Earlier in the day, Israeli airstrikes targeted weapons manufacturing and storage facilities, a Hamas headquarters and police station. A total of six militants were killed. In Jebaliya, Palestinian medical teams found three bodies in rubble after Israeli troops left and medical officials said another three people wounded previously died Monday.
Olmert said Israel must press forward with peace talks with moderate Palestinians.
"We want to carry on with negotiations because the alternative is Hamas rule in the West Bank as well. Anyone who sees what is going on in Gaza can well imagine how much worse it would be for Israel if there were to be Hamas rule in the West Bank," Olmert said.
The Palestinians have two rival governments - the Abbas administration in the West Bank and the Hamas regime in Gaza.
While battling Hamas, Israel relaunched peace talks with Abbas at a U.S.-hosted conference in November. Although Abbas wields little influence in Gaza, he still claims to represent the area. On Sunday, he suspended the peace talks in sympathy with the people of Gaza.
Palestinian officials said that Abbas would not change his mind until the Israeli offensive ended and that he intended to complain about the Gaza incursion to Rice when she visited his West Bank headquarters Tuesday.
The Gaza violence illustrates the huge challenges facing the U.S.-sponsored peace push.
Olmert and Abbas have set a December target for a peace agreement. But with Hamas firmly in control of Gaza, it remains unclear how any deal can be carried out. Hamas, a violent Islamic group with close ties to Iran, is committed to Israel's destruction.
--- Associated Press writer Ibrahim Barzak in Gaza City contributed to this report.
