Israel threatens stronger military steps in Gaza

JERUSALEM, May 20 (Reuters) - Prime Minister Ehud Olmert today threatened stronger Israeli military action in the Gaza Strip unless Hamas halted its rocket attacks on southern Israel.

''If the measured steps we are taking, in the political and military sphere, do not bring about the desired calm, we will be forced to intensify our response,'' Olmert told his cabinet in broadcast remarks.

Israel killed three suspected Hamas militants in a Gaza air strike, building up pressure on the ruling Palestinian group to stop firing the makeshift rockets. But Israeli political sources said a big Israeli ground operation was unlikely.

The Israeli military said 10 rockets were fired from Gaza on Sunday and that four landed in southern Israel. There were no reports of casualties.

In the Gaza Strip, the latest Egyptian-brokered ceasefire appeared to be holding after more than a week of fierce internal fighting between Hamas Islamists and President Mahmoud Abbas's secular Fatah faction.

At least 49 Palestinians have been killed in the factional battles, the most deadly in Gaza since Hamas and Fatah formed a unity government in March.

Hamas has accused Israel of carrying out attacks against it in a bid to help Fatah.

Israel's bombing campaign against Hamas -- Olmert said militants have fired more than 120 rockets from Gaza since Wednesday -- has killed at least 21 Palestinians including, local residents said, some 5 civilians.

Olmert said dozens of Hamas militants had been killed in the Israeli strikes over the past several days.

''Hamas people are paying, and will pay, a very heavy personal price for these attacks on the residents of Sderot and nearby communities,'' he said.

There was no immediate Hamas response to Olmert's comments but within hours of his remarks, a Qassam rocket hit the centre of the southern Israeli town of Sderot, local residents said.

The wave of rocket attacks has caused injuries but no deaths in Sderot and the surrounding area where a total of 40,000 people live.

SECURITY CABINET Israeli Defence Minister Amir Peretz, speaking before a security cabinet meeting to decide on Israel's next military moves, said confrontations with Hamas ''could continue for some time''.

Israel has moved an undisclosed number of tanks, armoured vehicles and ground forces into areas just inside the Gaza border, raising Palestinian fears of a wider offensive into the territory Israeli settlers and soldiers quit in 2005.

''We are assessing the situation every few hours and will definitely decide how to continue our activities,'' Peretz said.

Olmert is struggling to stay in office after an official report criticised his handling of last year's Lebanon war and is under domestic pressure to stop the rockets without getting bogged down in another costly conflict.

At the same time, he knows a wide-ranging Israeli military response in Gaza could have a major influence on the course of Fatah's power struggle with Hamas, which unlike Abbas's group, does not recognise Israel.

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