Israeli shelling killed at least 15 Palestinians sheltering in a UN-run school and another 17 near a street market yesterday, Gaza’s Health Ministry said, with no ceasefire in sight after more than three weeks of fighting.

Israeli tank shells hit a compound housing a UN school in the Gaza Strip, killing at least 15 people and wounding dozens who were seeking shelter from fierce clashes on the streets outside.

Air France and Germany’s two largest airlines have cancelled more flights to Tel Aviv because of continuing safety concerns amid the fighting between Israel and Hamas.

Thousands of Israeli soldiers backed by tanks have entered the Gaza Strip, escalating a 10-day campaign of heavy air bombardment to try to destroy Hamas' arsenal, rocket-firing abilities and the tunnels militants use to infiltrate the Jewish state.

Israel’s defence minister Ehud Barak announced he was quitting politics, a surprise decision that deepens uncertainty over how Israel will confront Iran’s nuclear programme.

Israel has released hundreds of Palestinian prisoners in the second and final phase of a swap with Hamas militants that brought home an Israeli soldier after five years in captivity.

Celebrations have erupted across the Middle East after Hosni Mubarak stepped down as Egypt’s president.

THE Israeli military said yesterday it has reprimanded two high-ranking officers for approving the firing of artillery shells toward a UN compound during the Gaza Strip war last year – the first admission of any high-level wrongdoing during the offensive.

Palestinian Prime Minister Salam Fayyad submitted his resignation today, a move that could help pave the way for an elusive power-sharing deal between Palestinian moderates and militants.

A TOTAL of $4.481 billion (€3.5bn) was pledged by international donors yesterday to help the Palestinian economy and rebuild Gaza after Israel’s three-week offensive.

HAMAS government in Gaza was back in business yesterday, operating from makeshift offices because most administrative buildings were bombed.

Israel implemented a unilateral ceasefire early today in its 22-day offensive that turned Gaza neighbourhoods into battlegrounds and dealt a stinging blow to the Islamic militants of Hamas.

Israeli warplanes retaliating for rocket fire from the Gaza Strip pounded dozens of security compounds across the Hamas-ruled territory in unprecedented waves of airstrikes today, killing more than 200 people and wounding nearly 400.

Israeli warplanes retaliating for rocket fire from Gaza pounded dozens of security compounds across the Hamas-ruled territory in unprecedented waves of air strikes today, killing at least 155 and wounding more than 310 in the bloodiest day in Gaza in decades.

ISRAELI troops and Palestinian militants fought with missiles and mortars along the Gaza-Israel border on Wednesday, raising new concerns that an increasingly shaky five-month-old truce might collapse.

HAMAS militants pounded southern Israel with a barrage of rockets yesterday, hours after Israeli forces killed six gunmen in a fresh bout of violence that threatened to unravel a five-month-old truce that has brought relief to both Gaza and southern Israel.

Palestinian militants Hamas stepped up their verbal attacks on President Mahmoud Abbas today on the eve of the US Middle East conference, saying his policies had failed and undermined prospects for statehood and unity.

The Hamas militant group today banned public prayers in the Gaza Strip, moving to halt growing dissent by supporters of the rival Fatah movement.

The Israeli and Palestinian leaders today tackled the core issues that have tormented would-be Mideast peacemakers for decades – Palestinian refugees, final borders and the fate of Jerusalem.

The Hamas militant group has smuggled tons of explosives into the Gaza Strip since taking control of the area last month, significantly boosting its ability to carry out attacks on Israel, an Israeli military official said today.

Palestinian President Mahmoud Abbas today endorsed the idea of early elections, deepening animosities with Hamas following the Islamic militant group’s violent takeover of the Gaza Strip.

Israeli warplanes sent missiles slamming into a car carrying Hamas militants and a consignment of weapons before dawn in Gaza today.

The Islamic militant group Hamas today called for new attacks on Israel after eight Palestinians were killed in a surge of fighting over the weekend.

Hamas and Fatah gunmen fought in Gaza City’s beachfront neighbourhoods and around security compounds this morning, ignoring renewed truce appeals and Arab mediation efforts.

GUNFIGHTS between Hamas and Fatah gunmen erupted across the Gaza Strip yesterday, killing four people, wounding several others and destroying a days-old truce.

In a show of strength against Hamas, Palestinian President Mahmoud Abbas’ Fatah movement planned a large anniversary rally today, but Abbas aides said the moderate leader would also give coalition talks with the Islamic militant group another chance.

Israeli prime minister Ehud Olmert and Palestinian president Mahmoud Abbas held a long-overdue summit today, reviving hope that peace talks can resume after years of fighting, hostility and distrust.

In a statement faxed to reporters today, Hamas openly accused a Fatah “death squad” for the killing of Hamas judge Bassam al-Fara.

Israelis and Palestinians tonight threatened to scrap a truce that has largely ended five months of Gaza violence, with Palestinian militants insisting it must also apply to the West Bank and Israeli leaders complaining that Gaza rocket squads are still active.

Palestinian President Mahmoud Abbas declared today that months of coalition talks with the ruling Hamas have hit a “dead end” and his aides said he’s finished negotiating with the Islamic militants.

Israel today promised a punishing response to the first deadly Palestinian rocket attack on the Israeli town of Sderot since the Gaza Strip evacuation last year, even as Palestinian leaders and international envoys pursued diplomatic efforts to spur deadlocked peacemaking.

Palestinian Prime Minister Ismail Haniyeh said he would be willing to sacrifice his job if the international community would lift economic sanctions that have crippled his Hamas-led government.

Palestinian President Mahmoud Abbas said he will dissolve the Hamas-led government within two weeks if the Islamic militant group does not agree to form a governing coalition with his Fatah Party.