An Israeli soldier and two Palestinian militants were killed today in the heaviest Gaza fighting since Yasser Arafat's death to raise the prospect that renewed violence could complicate a vote for his successor.
A young Palestinian boy runs away after an Israeli missile strike in the Gaza strip
Hamas gunmen detonated a bomb hidden in a chicken coop that troops were searching, before opening fire, killing one soldier and wounding four.
In the hunt for the attackers Israeli soldiers killed two Islamic Jihad militants and wounded several bystanders.
The ambush, which shattered a relative lull in fighting since Mr Arafat's death last month, came as moderate former prime minister Mahmoud Abbas faced resistance to a proposed ceasefire to help instil calm for a January 9th presidential election.
"Calm cannot be achieved at the expense of Palestinian blood," Hamas spokesman Mushir al-Masri said.
Polls show Mr Abbas, favoured by Israel and Washington as a potential peacemaker, neck-and-neck with Marwan Barghouthi, a grassroots leader of a Palestinian uprising who has been held in an Israeli jail for more than two years.
The violence erupted a day after Mr Abbas, who succeeded Mr Arafat as PLO chief, met Hamas leader Khaled Meshaal in Damascus.
Palestinian sources said Mr Abbas made no progress in coaxing Hamas into suspending suicide bombings and other attacks on Israelis.
Renewed fighting could also spell trouble for Israeli Prime Minister Ariel Sharon's efforts to forge a "unity" government to carry out his plan for evacuating all Jewish settlements in the occupied Gaza Strip by the end of next year.
Earlier this week, Hamas ruled out any truce with Israel and repeated its objective of destroying the Jewish state, rejecting what had appeared to be more conciliatory comments by one of the group's West Bank leaders.
Since Arafat's death, Israel had said it would restrain military operations in the West Bank and Gaza Strip, territories captured in the 1967 Middle East war, as long as calm prevailed. But Hamas has vowed to ensure that any Israeli pullout from Gaza will be under fire.
Polls show most Israelis back Sharon's plan to quit Gaza, but ultranationalists and rebels within his own rightist Likud party say any withdrawal would be a "reward for terror".
Mr Sharon has called a crucial vote on Thursday of Likud's hard-line central committee in an attempt to reverse its ban on coalition talks with the centre-left Labour Party, which has promised to help him push through his Disengagement Plan"