The Red Cross and European Union called for restraint as the two-day death toll rose to 33. These included one Israeli, whose death on Wednesday was the first such killing since May, four Palestinian boys who medics said were playing soccer on Thursday, and a baby killed in the bombing of a Hamas ministry.

Dozens more people were wounded in the crowded territory and explosions and gunfire continued well after nightfall on Thursday.

The bloodiest exchanges in months came days before United States Secretary of State Condoleezza Rice returns to the region hoping to invigorate limping peace negotiations between Israel and the anti-Hamas Palestinian leadership in the occupied West Bank.

As Israeli Prime Minister Ehud Olmert and other officials offered mixed signals on any major ground offensive, residents said soldiers raided homes in southern Gaza and a spokesman for Palestinian President Mahmoud Abbas, a sworn enemy of Hamas, accused Israel of trying to wreck the US-backed peace process.

Dr Rice, who met Mr Olmert in Tokyo, would not be drawn on whether she had joined calls for him not to use 'disproportionate force' but said Hamas must stop the rockets. Some of those hit the city of Ashkelon, in an escalation that saw the use of Soviet Katyusha missiles with longer range than locally improvised weapons.

Asked about the four boys, aged 10 to 15, who were killed on Thursday, the Israeli army said it had targeted a rocket squad.

In another strike, on a van laden with soft drinks and snacks, it killed a munitions maker from a militant group allied to Hamas. Two power company workers died when their van was hit.

At least 11 of those killed on Thursday were militants. The bloodshed took to 66 the number of Gazans killed in Israeli action so far in February, passing the 62 deaths in all of January.

Though many were gunmen, it is a toll Palestinians and Israel's critics say shows a disproportionate response to daily rocket fire that has caused few casualties in Israel while nonetheless badly disrupting life in border towns and villages.

Amid Israeli outcry over the death of a compatriot who was father to four children, the Foreign Ministry spokesman warned the rockets 'may leave us no choice' but to send back in troops, who quit Gaza in 2005 and have since mounted only brief raids.

Deputy Defence Minister Matan Vilnai said: 'The Palestinians are bringing this on themselves, because many Palestinians will be hurt. There will be no other choice ... We will act.'

But Mr Olmert, certainly aware an invasion would mean many more casualties both among his own troops and the 1.5 million Palestinian civilians, sounded more cautious: 'We are at the height of the battle,' he said in Tokyo.

But he added that the war was a 'long process' and he had 'no magic formula'.

Rice calls for end to attacks
Asked if she had urged Mr Olmert not to use disproportionate force, Dr Rice said: 'That's not a good way to address this issue. The issue is that the attacks, rocket attacks, need to stop.'

Mr Abbas's spokesman Nabil Abu Rdainah said in a statement: 'The Israeli government ... aims to destroy the peace process.'

Mr Olmert said 'the continuous shooting of Qassam rockets against uninvolved, innocent civilians is a major threat to the stability' of contacts with Mr Abbas's Palestinian Authority.

Washington hopes those talks can result in a statehood deal this year but Palestinians have complained about the slow pace.

The European Union also condemned Hamas but added it 'urges Israel to show restraint and refrain from all activities contrary to international law' and in particular called for an end to Israel's tight blockade on goods and services to Gaza.

Mr Abbas's Foreign Minister Riyad al-Malki said: 'These stupid missiles being launched - firecrackers, but at the end they have killed Israeli civilians - we condemn this ... But at the same time, we condemn all the Israeli incursions into Gaza.'

One missile struck a police post near the home of Hamas leader Ismail Haniyeh, who was Mr Abbas's prime minister until Hamas defeated Mr Abbas's Fatah faction in fighting for Gaza in June. Though Israel has warned it may resume strikes on top Hamas leaders, the attack did not appear to target Mr Haniyeh.

The Israeli military said 31 rockets and 15 mortar bombs were fired from the Gaza Strip on Thursday. Three people were wounded in Israel and the government's security minister, visiting Sderot, had to scramble for cover as a siren sounded. -- REUTERS