Israel raids north Gaza after rocket strike

Prime Minister Ariel Sharon said yesterday he had ordered Israel's army to take "all necessary steps" against Palestinian militants after they fired a rocket into a large Israeli city for the first time.

"I have instructed the minister of defence to take all necessary steps to avoid such actions in the future," he told reporters in Jerusalem after the rocket strike into Ashkelon, which caused no damage or casualties.

Eight Israeli tanks and two armoured bulldozers rumbled into the Beit Hanoun area and began felling trees about 1,000 metres from a residential zone, witnesses said.

An Israeli security source told Reuters: "We are levelling shrubbery, bushes and trees used as shelter for the (Hamas militant) cell that fired the Qassam rocket."

Israel warned earlier that the attack may have crossed a "red line" threshold for serious military action inside Palestinian-administered Gaza after Islamist militant factions called off a seven-week-old truce.

The rocket strike into an industrial zone of Ashkelon, a coastal city of 116,000 people nine kilometres north of the Gaza boundary, was the farthest a Qassam had been fired into Israel since a Palestinian uprising for statehood began in 2000.

Palestinian officials said Palestinian security forces had rushed to Beit Hanoun shortly after the rocket was fired to rein in Hamas militants responsible, preventing further launchings.

"There was a chase and a shootout," a Palestinian security official told Reuters shortly before Israel's incursion. "Our forces are still searching the area in the northern Gaza Strip."

Islamic militants renounced their truce, crucial to a troubled US-backed peace plan, after Israel assassinated a Hamas political leader in a missile strike following a suicide bomb attack in Jerusalem by a Hamas man based in the West Bank.

Israeli troops have been poised at the entrance to northern Gaza since Hamas and Islamic Jihad renounced a ceasefire underpinning a US-backed "road map" peace plan.

New volleys of Qassams have since hit Jewish settlements inside Gaza and communities in southern Israel, causing minor damage and few casualties.

Israel fears Qassam strikes also from the West Bank against the nearby densely populated coastal heart of the country.

Israeli officials said yesterday attack may have breached a "red line" necessitating a major military response.

"It's crossing a red line... This is an alarming reality for us," Foreign Ministry spokesman Jonathan Peled told Reuters.

The "road map" requires Palestinians to end violence and Israel to pull back forces from occupied territory to pave the way for a Palestinian state in Gaza and the West Bank by 2005.

In an apparent clampdown on Hamas affecting thousands of needy Palestinians, the Palestinian Monetary Authority said it had frozen 39 bank accounts held by 12 Islamic charities, most of which are widely believed to be Hamas-sponsored.

The move followed a US decision to freeze assets of six top Hamas figures after a suicide bomber killed 21 people in Jerusalem in what Hamas called retaliation for army search-and-arrest raids that continued despite the truce.