Israel attacks despite diplomatic push

Palestinians deny making mortars at bombed factory

Two Palestinians have been killed by Israeli fire in the Gaza Strip, as the latest wave of violence in the region shows no sign of abating.

Hours earlier, Israeli helicopter gunships blasted what the army described as a Palestinian mortar factory in the Jabaliya refugee camp, just outside Gaza City.

Mitchell proposals

Disengagement of forces on both sides

Resumption of security co-operation

Clear statements by the Palestinian Authority for an end to violence

Freeze on all settlement construction and enlargement

The latest incidents came on the day that the Mitchell report, containing proposals to end the eight-month uprising, was due to be published.

The European Union's foreign policy chief, Javier Solana, who is in Cairo at the start of a four-day diplomatic initiative, has called for an immediate ceasefire.

"We are really on the verge of a very critical situation and everybody with common sense has to do the utmost to stop it," he said.

A ceasefire should be followed by confidence-building measures to pave the way for a resumption of peace talks, he added.

New incursion

In new unrest on Monday, Israeli tanks crossed into Palestinian-controlled territory to raid the town of Qarara in the Gaza Strip, Palestinian security sources told the French news agency, AFP.

They shelled a mosque in the town and strafed cars with heavy machine-gun fire, the sources added.

No casualties have been reported.

The Israeli army said the Palestinians killed earlier on Monday were attempting to plant a roadside bomb near the border fence with Israel. Palestinian officials said the men were farmers on the way to their field.

We will do everything necessary and use everything we have to protect Israeli citizens

Israeli Prime Minister Ariel Sharon

And, reporting on the earlier air strike, the Israelis described the target as factory which produced mortar bombs used in anti-Israeli attacks.

"The factory is one of a few facilities which make mortar bombs that are fired towards Israeli settlements in the Gaza Strip and towards Israel's boundaries," the statement said.

The Palestinians, however, say the Israeli strike destroyed a steelworks factory, wounding four people.

BBC Jerusalem correspondent Hilary Andersson, reporting from the scene, says there is no direct evidence of mortars being made there, although the site - a scene of complete devastation - was clearly used to manufacture metal parts.

The international commission that drew up the Mitchell report is understood to conclude that violence on the ground must stop before any negotiated settlement can be embarked on.

But it says there is little sign of that happening.

Urging restraint

On Friday, Israel used F-16 fighter bombers against Palestinian towns for the first time, killing 12 Palestinian police officers.

This was in retaliation for a suicide bomb attack in Netanya, which killed at least five Israelis.

Palestinians buried a farmer killed on Saturday

Israeli radio reported that the country's security cabinet resolved on Sunday "to continue to strike at Palestinian terrorists in a focused and pinpointed manner".

In a strong statement from Washington, US Vice-President Dick Cheney urged Israel to stop using F-16 warplanes against Palestinians.

Egyptian President Hosni Mubarak has also warned that "the situation could reach the point of no return" and the Arab League has recommended that political contacts with Israel should be broken off.