Israel says Hizbollah raids an "act of war" by Lebanon

JERUSALEM, July 12 (Reuters) Israeli Prime Minister Ehud Olmert described deadly raids by Hizbollah guerrillas into Israel today as an ''act of war'' by Lebanon and said its government would bear the consequences.

Hizbollah said it captured two Israeli soldiers in the cross-border attacks from Lebanon. Al Jazeera television said seven Israeli soldiers were killed.

Olmert threatened ''very painful and far-reaching'' action in response to the raids, which have sharply raised Middle East tensions.

''It is an act of war by the state of Lebanon against the state of Israel in its sovereign territory,'' Olmert told a news conference with visiting Japanese Prime Minister Junichiro Koizumi.

''The Lebanese government, of which Hizbollah is a part, is trying to shake regional stability. Lebanon is responsible and Lebanon will bear the consequences of its actions.'' Israeli ground forces had crossed into Lebanon, Olmert said, apparently referring to initial searches for the soldiers.

In addition, Israel had already began calling up reserve troops, signalling a large-scale campaign, Israel's Channel 10 television said.

It said a reserve infantry division had been mobilised and was expected to be sent to the northern border with Lebanon. Israeli forces, which came under frequent attack by Hizbollah, quit southern Lebanon in 2000 after 22 years of occupation.

Olmert has called a special cabinet session for 1400 hrs.

''We are already responding with great strength ... The cabinet will convene tonight to decide on a further military response by the Israel Defence Forces,'' he said.

Israel has already launched a major military offensive in the Gaza Strip after Palestinian militants abducted a soldier on June 25 in a cross-border raid by gunmen including members of the governing Hamas movement.

''These are difficult days for Israel and its citizens,'' Olmert earlier told reporters.

''There are elements, to the north and the south, that are threatening our stability and trying to test our determination. They will fail and pay a heavy price for their actions.'' Olmert also issued a veiled threat against Syria, where Hamas's exiled political leadership lives.

''Syria has proved ... it is a government of terror ... There must be proper preparations in order to deal with the Syrian government's behaviour,'' Olmert said.

Israeli war planes buzzed one of Syrian President Bashar al-Assad's palaces on June 28 in what the Jewish state said was a warning to him and the exiled Hamas leaders he hosts.

Reuters SHB VV1731