Israeli troops and tanks swept into a Gaza Strip refugee camp Tuesday, killing eight Palestinians just hours after Israel lost its first two soldiers in a month of relative calm that has spurred new peace efforts.

Palestinians evacuate their children during an Israeli operation at the Rafah refugee camp on December 23,2003. Israeli troops and tanks moved into the Gaza Strip refugee camp just hours after a militant ambush cost Israel its first two dead soldiers in a month of relative calm.   [Reuters]

The deadliest raid in Gaza since October, and the militant ambush that killed the Israeli officers, underlined obstacles to talks after Egypt's foreign minister was accosted by Palestinian radicals who branded him a traitor for talking to Israel.

Foreign Minister Ahmed Maher, who won a cautious Israeli offer of support for a Palestinian truce Cairo is trying to broker, played down Monday's incident at Jerusalem's al-Aqsa mosque and said the peace push would go on.

Palestinians said 20 Israeli tanks rumbled into the teeming, cinder-block Rafah refugee camp overnight, drawing militant fire. More tanks, firing machineguns, moved in during the day.

Israeli soldiers killed a 50-year-old man and two gunmen in the camp, medics said, adding another Palestinian was shot in the stomach and died in hospital.

One militant was brought dead to the hospital still clutching a bomb, witnesses said. Another died of shrapnel wounds. A Palestinian policeman was shot near the border post and an onlooker was killed as he watched tanks at his window.

Palestinian medics said at least 40 people were wounded.

The army said Tuesday's raid was not a response to the ambush in central Gaza Monday night in which two officers died -- the first Israelis killed in a month. At least 25 Palestinians died in sporadic violence over the same period.

An army spokesman said the Rafah raid was "part of a continuous fight" to destroy tunnels used to smuggle arms from Egypt. The army said one tunnel was found in a house. A similar operation in October took a week and left 15 Palestinians dead.

"Blood for blood and killing for killing," chanted thousands of Palestinians at funerals for the dead in Tuesday's raid.

MILITANTS VOW REPRISALS

The al-Aqsa Martyrs Brigades, which lost two members in the raid and was one of two militant groups behind Monday's ambush, vowed to strike back inside Israel. The group is linked to Palestinian President Yasser Arafat's Fatah faction.

The Jewish state has demanded a Palestinian crackdown on militant groups as stipulated by the U.S.-backed "road map" peace plan and, if it failed, warned of unilateral steps that would cost Palestinians some of the land they want for a state.

Palestinians say Israel must meet its own road map pledges by removing Jewish outposts and freezing settlement-building on occupied land, as well as halting work on a barrier through the West Bank that Israel says it needs to keep out attackers.

The Palestinian Authority condemned the Rafah incursion. "It is horrific state-sponsored terrorism carried out by Israeli occupation forces daily against the Palestinian people despite calm from the Palestinian side to give a real chance to Arab and world efforts (to broker a truce)," it said in a statement.

Israel says the recent spell of relative calm is deceptive because, it says, more than 20 would-be suicide bombers have been caught while trying to make their way to its cities.

U.N. Secretary-General Kofi Annan also bemoaned the raid.

"(He) reiterates that Israel, as the occupying power, must protect the civilian population, desist from using disproportionate force ... and return to peaceful negotiations according to the road map," U.N. spokesman Fred Eckhard said.

Egypt has been trying to bring Israelis and Palestinians together for talks and also broker a cease-fire by militant factions that could give the peace plan fresh impetus.

Israeli Prime Minister Ariel Sharon signaled to Maher that Israel would welcome any militant truce, but factions dismissed that as empty words.

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