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Israel launches attack in northern Gaza

Olmert rejects Palestinian militants' ultimatum for prison release

Palestinian children hold portraits of relatives held in Israeli prisons at a news conference in Ramallah.

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JERUSALEM (CNN) -- Israel broke an uneasy quiet along the Gaza border late Monday, launching airstrikes near the town of Beit Hanoun in the northern part of the territory and inside Gaza City.

Palestinian security sources said the attack near Beit Hanoun killed at least one person and wounded three others. The sources said tanks and armored personnel carriers had taken up positions around the town.

The Israeli army said the airstrike targeted a militant cell preparing explosive devices but did not comment on the movement of armored vehicles around Beit Hanoun.

The army had earlier confirmed a limited operation to clear the area of tunnels and explosives. Beit Hanoun was also the site of an airstrike nearly a day earlier.

A second strike hit near Gaza City's Islamic University and the Palestinian Foreign Ministry, CNN's John Vause reported from a rooftop north of that area.

A 6 a.m. Tuesday (11 p.m. ET) deadline, set by Palestinian militants holding an Israeli corporal, passed without any immediate word on his fate.

Israel on Monday rejected an ultimatum from the Palestinian militants holding Cpl. Gilad Shalit, saying it will not negotiate on their demand to release Palestinian prisoners.

The three Palestinian militant groups who claimed responsibility for Shalit's June 25 kidnapping had set the Tuesday deadline for Israel to begin releasing Palestinian prisoners or suffer unspecified "consequences."

The groups said the matter would be "closed" if Israel did not respond by the deadline.

As the day wore on, Ghazi Hamad, a spokesman for the Hamas-led Palestinian leadership, said his government was not involved in negotiations for Shalit's release but described Israel's continued military strikes as "complicating" efforts to find an end to the crisis.

He also called on Israel to deal with what he called the "tragedy" of almost 10,000 Palestinians held in Israeli jails.

Mark Regev, a spokesman for the Israeli Foreign Ministry, said Monday evening that releasing the soldier unconditionally could end the Israeli military operation in Gaza.

He warned that Hamas politicians who act like terrorists "will be treated as terrorists."

Asked if that meant that Palestinian Prime Minister Ismail Haniya would be targeted for assassination, Regev said the Hamas political leadership had expressed approval for the kidnapping and added, "All the Hamas leadership has to be seen as culpable."

Israeli Justice Minister Haim Ramon was more blunt.

"If, God forbid, they should hurt the soldier, our operations will be far, far worse," Ramon told Israeli Channel 2.

The Israeli government said it holds the Palestinian Authority responsible for the fate of the captured Israeli soldier.

"The government of Israel would not yield to any blackmail by the Palestinian Authority and the Hamas government led by murderous terror organizations," a statement from Israeli Prime Minister Ehud Olmert's office said.

"We will not hold any negotiations over release of prisoners. The Palestinian Authority carries full responsibility for the safety of Gilad Shalit." (Watch where militants lay the responsibility for Shalit's safety -- 1:44)

Syria would also be held accountable for Shalit's safety, Israeli Defense Minister Amir Peretz said, because Hamas militants involved in the abduction are based in Damascus, according to The Associated Press.

Egyptian mediators continued to try to solve the crisis diplomatically. They have proposed that the militants free Shalit with Israel announcing that it will consider the release of an undetermined number of Palestinians at some point in the future.

The situation escalated Monday when the three militant groups faxed their ultimatum to news agencies.

"We are giving the Zionist enemy until tomorrow, July 4, at 6 a.m. [11 p.m. ET Monday]. If they do not answer our humanitarian demands, the enemy will be responsible for all future consequences," the statement said.

The statement did not specify what the consequences would be if the deadline passed without action. It was released by the military wing of the ruling Hamas party; the Popular Resistance Committees; and the Army of Islam.

"The Israeli position is that we are not surrendering to blackmail and or any ultimatum," said Israeli Army Chief of Staff Dan Halutz after he visited the family of the captured soldier.

Hamad appealed for negotiations late Monday, according to AP.

"Since the kidnapping of the Israeli soldier, we have called for the need to protect his life and solve the problem through calm diplomatic channels," AP quoted the senior member of the Hamas political wing as saying.

Military pressure

With its troops lining the Gaza border, the Israeli military kept steady pressure on Palestinian militants but stopped short of a full military campaign.

Israeli missiles targeted two buildings in Gaza early Monday. The Israel Defense Forces and Palestinian sources said that Al Aqsa Martyrs Brigade -- a military offshoot of Palestinian President Mahmoud Abbas' Fatah movement -- had offices in one of the buildings in Gaza City.

Saeb Erakat, an adviser to Abbas, told CNN ahead of the latest Israeli airstrikes that "more bombs are not going to bring the soldier back alive, nor will they resolve this complex situation. It will only add to the complexities."

Erakat and Abbas are part of the Fatah Party, which lost power to Hamas in elections held earlier this year.

Three Palestinian gunmen were shot dead by Israeli troops in southern Gaza early Monday as they approached Israeli forces in an apparent attempt to detonate explosive belts two of the Palestinians were wearing, an Israeli military spokesman said.

The gunmen fired on the troops as they approached them near the airport in Dahaniya, the military said.

In a separate incident, Israeli forces fired on two Palestinian gunmen who approached them in northern Gaza. One of them was killed. The fate of the second gunman was uncertain.

Israeli forces Monday also killed a Palestinian who was carrying a rocket-propelled grenade near a border fence in Gaza.

The development came a day after Olmert told his Cabinet he had instructed the military "to intensify the force and activity of the IDF." (Watch as Palestinians struggle without basic necessities -- 2:45)

Copyright 2006 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.

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