Hizbollah hits Israeli border with mortar attack

An Israeli soldier has been killed and up to three more wounded in exchanges of automatic and shell fire with Hizbollah gunmen across the Lebanese border.

The most serious gun battle in six months on the northern front erupted yesterday when a patrol intercepted an armed Hizbollah cell that had infiltrated Israel. In what an army spokesman defined as a coordinated attack, the Iranian-backed militia fired a barrage of mortars at Israeli positions all along the border. Israeli forces retaliated with shells and missiles.

The offensive came at a time when the stand-off between Ariel Sharon's government and right-wing opponents of his plan to evacuate the Gaza Strip is turning vicious. Jewish extremists are fighting the army and provoking local Palestinians in Gaza and disrupting traffic on roads across Israel.

Four Palestinians and two Israelis, a soldier and a civilian, were wounded during a second day of rioting between Jewish squatters and Arab villagers in Muwassi, a Palestinian enclave in the main Gush Katif settlement block. Two of the Palestinians were reported to be in a critical condition.

Police, escorted by soldiers, went there at noon to arrest Israelis suspected of stoning Palestinians on Tuesday and in a vain attempt to prevent further disturbances. The Israeli activists, who came from outside the Gaza settlements, had commandeered an empty three-storey Arab house and barricaded themselves in.

As the force approached, Jews and Arabs began pelting each other with stones. After police arrested eight Jews, the riot became more violent. Soldiers, who tried to separate the combatants, fired shots in the air. After the wounded had been evacuated, a measure of quiet was restored, but the squatters remained in the Arab house. Fayez Shaath, a community leader, complained: "The Israelis are not withdrawing. They are destroying our property. We can't even get to our only clinic."

Army officers say they are awaiting orders from politicians to evict the squatters and to remove dozens of Israeli radicals who have turned an abandoned settlement hotel into a seaside fortress. They are also preparing to seal the settlement block to stop hundreds of anti-disengagement families pouring in now that schools are breaking up for summer holidays.

Inside Israel, thousands of settlers, decked in orange caps and T-shirts, paralysed major roads during the evening rush hour, blocking the entrance to Jerusalem. Earlier in the day, they scattered nails and oil on the Jerusalem-Tel Aviv road.

A radical fringe has taken the struggle further. Police have arrested a man on his way to sabotage telephone junction boxes outside government offices. Security has also been stepped up for Lt-Gen Dan Halutz, the chief of staff, after he received an anonymous letter reading: "You are following the Prime Minister's path. If you care about your family, you will refrain from this."

Maj-Gen Dan Harel, the chief of Southern Command, has banned one of the most high-profile firebrands, Itamar Ben-Gvir, from entering the Gaza Strip and the northern West Bank, where Israel is also evacuating four settlements. "This is just a beginning," one officer said. "Other restriction orders are in the pipeline. We know who the extremists are."