An Israeli aircraft fired a missile tonight that exploded close to the house of Palestinian Prime Minister Ismail Haniyeh in the Shati refugee camp next to Gaza City, Palestinian security officials said.

Israeli aircraft demolished two money exchange shops in Gaza used to channel funds to Hamas militants, the military said tonight.

Moderate Palestinian President Mahmoud Abbas and Prime Minister Ismail Haniyeh of Hamas made a new push today to restore a cease-fire with Israel that collapsed under a barrage of Hamas rocket fire.

Hamas militants defied Israeli air strikes and threats to kill their top leaders, firing more rockets into Israel, as the Palestinian president arrived in Gaza in an effort to defuse the escalating conflict.

The Israeli army have today confirmed an airstrike on a Hamas target in central Gaza.

A senior British diplomat today met with Palestinian Prime Minister Ismail Haniyeh to discuss the fate of a BBC journalist kidnapped by Palestinian militants.

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.

Palestinian leaders have been asked by the US and EU to be more clear on the new coalition government’s stance on violence against Israel.

Israeli leaders criticised the new Palestinian unity government today, saying the Hamas-Fatah coalition did not meet international conditions, including recognising the Jewish state’s right to exist.

Palestinian President Mahmoud Abbas today gave Prime Minister Ismail Haniyeh an extra two weeks to put together the new unity government between the rival Fatah and Hamas parties.

European Union officials said today they were cautiously optimistic about a Palestinian power-sharing deal reached by Hamas and Fatah political leaders in Saudi Arabia, but said it was too early to lift an international aid embargo against the Hamas-led Palestinian government.

A ceasefire started taking hold in the Gaza Strip today, after five days of intense Hamas-Fatah fighting that left 34 people dead.

Warring Hamas and Fatah factions in Gaza have tonight declared a ceasefire.

An explosion ripped through the Shati refugee camp – close to Palestinian Prime Minister Ismail Haniyeh’s house – after nightfall today, witnesses said.

Palestinian President Mahmoud Abbas today rejected US plans to establish a provisional Palestinian state in temporary borders, a key part of the “road map” peace plan.

Fierce fighting between Hamas and Fatah militants in Gaza and the West Bank continued today despite an official ceasefire.

Gunmen attacked the convoy of the Palestinian foreign minister and raided a training base for an elite unit of the security forces today, stepping up factional violence over a decision by Palestinian President Mahmoud Abbas to end nine months of Hamas rule and call early elections.

Hamas will not participate in early elections, Palestinian Prime Minister Ismail Haniyeh of Hamas said today, in a harsh verbal attack on President Mahmoud Abbas.

Hamas and Fatah gunmen exchanged fire on the streets of Gaza City and the West Bank city of Ramallah today, a day after unidentified gunmen shot at Prime Minister Ismail Haniyeh’s entourage.

Gunfire erupted at the Egypt-Gaza border crossing late today, hours after Hamas militants seized control of the terminal.

Hamas militants, angry that Palestinian Prime Minister Ismail Haniyeh was prevented from returning to Gaza from Egypt, burst into the Rafah crossing today, sparking a gunbattle with the guards at the border terminal.

IRAN has pledged $250 million (€188 million) in aid to the cash-strapped Hamas-led Palestinian government, the latest sign of increasingly close ties between the Islamic group and Tehran, Prime Minister Ismail Haniyeh said.

Iran has pledged US$250m (€188.8m) in aid to the cash-strapped Hamas-led Palestinian government, Prime Minister Ismail Haniyeh said today.

The Israeli army arrested 16 Palestinian militants today in raids across the West Bank, despite a decision by the military to scale back operations in order to bolster a fragile truce in the Gaza Strip.

A ceasefire in the Gaza Strip appeared to be holding this morning, stopping Palestinian rocket fire and Israeli operations for the first time in five months.

Rocket fire from the Gaza Strip at Israel died down today after a ceasefire, giving hope the truce might end five months of bloody destruction and open a path towards peace talks.

The oldest Palestinian suicide bomber, a 64-year-old widow, lived in a one-room shack and had so many grandchildren that relatives lost track of the number, but her daughter said Fatma Omar An-Najar was driven to lay down her life in an attack on Israelis because one grandson was killed and another disabled in clashes with troops.

AN AIDE to President Mahmoud Abbas yesterday said talks on forming a Palestinian unity government have been suspended, the latest setback in drawn-out efforts by the rival Hamas and Fatah movements to establish a coalition acceptable to the West.

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.

Israeli helicopter gunships, tanks and ground troops tightened their grip today on a northern Gaza town, killing an elderly civilian, two militants and a police officer in Israel’s biggest push in months to stop Palestinian rocket fire.

Disgruntled relatives of a Fatah activist killed in recent fighting with Hamas fired at Prime Minister Ismail Haniyeh’s motorcade as it drove through Gaza today.

Secretary of State Condoleezza Rice today said the United States is “very concerned” about the plight of the Palestinians and pledged to improve living conditions in the West Bank and Gaza Strip.

Rivals Hamas and Fatah called off top-level talks on forming a Palestinian coalition government that might ease crippling international sanctions, the latest difficulty in bridging formidable ideological differences.

Palestinian Cabinet ministers from Hamas handed in their resignations today, a step toward forming a unity government with the moderate Fatah.

Palestinian President Mahmoud Abbas and Prime Minister Ismail Haniyeh today agreed that their moderate Fatah and militant Hamas parties would form a coalition government – a move the Palestinians hope would ease crippling international sanctions.

Palestinian Authority Prime Minister Ismail Haniyeh said today that his embattled Hamas-led government had no intention of stepping down, despite a sweeping civil service strike and an economic crisis that a top UN official said has brought the Gaza Strip to a “point of near meltdown".

TWO Fox News journalists were freed in good health yesterday after a two-week kidnap ordeal in Gaza during which they were blindfolded, tied up and forced to convert to Islam at gunpoint.

A previously unheard of Palestinian group, the Holy Jihad Brigades, today claimed it had kidnapped two Fox News journalists and set a 72-hour deadline to swap them for Muslim prisoners held in US jails.

Prime Minister Ismail Haniyeh of Hamas and moderate Palestinian President Mahmoud Abbas today agreed to start negotiations on forming a broader government, a government spokesman said.

Palestinians launched an investigation today after seven people were rushed to hospital when one of them opened a suspicious envelope addressed to Palestinian Prime Minister Ismail Haniyeh, officials said.

Palestinian militants in Gaza fired three rockets at Israel early today, despite reports that they had agreed to halt such attacks.

Israeli prime minister Ehud Olmert stepped up pressure on the Palestinian government, ordering his military to “do all it can” to free an abducted soldier and hinting Israel may arrest Hamas leaders in Gaza.

Israeli Prime Minister Ehud Olmert stepped up pressure on the Palestinian government today, ordering his military to “do all it can” to free an abducted soldier and hinting Israel may arrest Hamas leaders in Gaza.

Palestinian president Mahmoud Abbas told delegates from various factions today that efforts aimed at getting the Hamas government to implicitly recognise Israel have failed to produce agreement and he will now call a national referendum on the issue.