Israeli forces move back into northern Gaza Strip

GAZA, July 16 (Reuters) Israeli forces today clashed with militants in Gaza as tanks moved back into the north of the Strip on an offensive that has continued even as fighting with Lebanese Hizbollah guerrillas opened a second front.

The Gaza offensive, aimed at recovering a captured soldier and stopping armed groups from firing makeshift rockets, has piled pressure on the Palestinian government led by Hamas, which demands a prisoner swap for the Israeli corporal.

Israeli tanks and armoured personnel carriers, backed by helicopters with machine guns sending down bursts of fire, moved into farmland near Beit Hanoun, an area often used by militants for launching rockets.

Small groups of militants opened fire at the Israeli forces, but there was no report of casualties.

''There is an army activity in Beit Hanoun. There has been deterrent fire,'' said one Israeli military source.

Israeli troops had pulled out of the northern Gaza Strip a week earlier after a major raid into the territory, which Israel abandoned in 2005 after a 38-year occupation.

Israel killed two Palestinians and attacked the economy ministry yesterday, striking at the Hamas administration. Israel holds Hamas responsible for the fate of Corporal Gilad Shalit, who was captured in a raid from Gaza on June 25.

Israel has said it will not discuss a prisoner exchange.

The Israeli offensive in Gaza has killed some 85 people, about half of them militants.

At the same time, Israel has been waging an offensive aimed at crippling Hizbollah after the group captured two soldiers in an attack on Israel, killed eight others and rained rockets on the north of the Jewish state.

At least 104 people, all but four of them civilians, have been killed in the Israeli assault on Lebanon.

REUTERS DKS BD0445