The move follows the killing of a Hamas leader
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Israel has reimposed a roadblock on Gaza's main highway as it continues military action against Palestinian militants in the wake of Tuesday's suicide bombing in Jerusalem.
The latest measure cuts the territory in two and undoes one of the confidence-building measures adopted under the US-backed peace roadmap.
For the second day in a row the Israeli army sent tanks into the West Bank town of Jenin and forces are still in the centre of Nablus.
Thousands of Palestinians have turned out in Gaza for the funeral of the Hamas leader Ismail Abu Shanab, who was killed in an Israeli air strike.
The bodies of Abu Shanab and his two bodyguards have been taken from Gaza City's main hospital, on their way to Gaza's al-Omari mosque, surrounded by militiamen.
Palestinian militant groups Hamas and Islamic Jihad have called off their truce - announced on 29 June - and vowed to take revenge for the killings.
Fears for peace plan
In a statement, Hamas' military wing urged its "fighters in Palestine to strike in every corner of the Jewish state" following the death of Abu Shanab and two of his bodyguards.
The BBC's James Reynolds, in Jerusalem, says Israeli political sources doubt the ability of the Palestinian Prime Minister Mahmoud Abbas - known as Abu Mazen - to tackle the armed groups.
In Jerusalem there are more police officers and security guards out on the streets looking to prevent suicide bombings, our correspondent says.
Newspapers report that the Israeli Government is now prepared to track down and kill the leaders of these groups one by one wherever they may be.
On Thursday night, Palestinians in the Gaza Strip fired more than a dozen mortar bombs and several rockets at Jewish settlements inside the Strip and at Sderot, a nearby Israeli town.
Witnesses said the shelling caused slight damage but no casualties.
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ISMAIL ABU SHANAB
Represented Hamas at meetings with the Palestinian PM on a Hamas truce
Spent time in Palestinian Authority detention
Studied in the US and appeared often in American media
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The upsurge in violence threatens to derail the US-backed roadmap for peace, accepted by Israel and the Palestinians as a way to end the three-year-old conflict.
US Secretary of State Colin Powell said the attack did not mean the end of the roadmap and said both sides must recommit themselves to it.
He called on Palestinian leader Yasser Arafat to work with his prime minister and to use his security forces to take decisive action against Palestinian militant groups.
Abu Mazen said the Israeli attack would undermine plans by the Palestinian Authority to rein in the militants which it announced in the wake of the Jerusalem bombing.