JABALYA / GAZA, PALESTINE

Israel stormed a refugee camp and pounded security targets in the Gaza Strip on Monday in fighting that killed 18 Palestinians and set back peace hopes raised by the ending of Yasser Arafat's confinement in the West Bank.

In a heavy offensive on the eve of a truce mission by U.S. envoy Anthony Zinni, tanks also rumbled into Ramallah, the city where the Palestinian leader has been cooped up since December.

Shooting erupted as the troops entered the edges of the al-Ama'ari refugee camp in Ramallah. There was no word of casualties, although heavy machinegun fire narrowly missed journalists filming from the top of a hotel.

Tanks and troops backed by helicopter gunships battled into Jabalya refugee camp near Gaza City late on Monday, sparking fighting that left hospitals barely able to cope.

People ran screaming for cover down the camp's many alleys and ambulance sirens wailed as the tanks surged forward in what Israeli military sources called a raid on militants who have made and fired mortar bombs and rockets at Israel.

Hospital sources said at least 17 people were killed and 50 injured in the densely populated camp of about 90,000 people before the tanks withdrew about four hours later.

Witnesses said the soldiers blew up a foundry and two homes, one of them of a man who attacked a Tel Aviv restaurant last week, killing three people before he was shot dead himself.

An Israeli military source said the foundry had been used by the Hamas militant group to make short-range Qassam rockets.

In the central Gaza Strip, the Israeli navy struck a Palestinian naval headquarters and other security targets near Deir al-Balah town. Palestinian security sources said one man died and six others were hurt by rockets fired by gunboats.

RAIDS ON REFUGEE CAMPS

The Israelis have repeatedly raided refugee camps for two weeks in what they say are sweeps of "bastions of terror." They have made widescale arrests, including detaining several hundred men in the Dheisheh camp in Bethlehem on Monday.

But the offensive has failed to quell a more than 17-month-old Palestinian uprising against Israeli occupation, and Palestinian attacks have continued.

After Washington expressed displeasure with his vows to beat the Palestinians until they sue for peace, Israeli Prime Minister Ariel Sharon lifted a demand for seven days' calm before cease-fire talks, allowed talks with the Palestinians on security matters, and said Arafat could move freely in the West Bank and Gaza.

The gestures raised hopes for truce talks, but tanks and troops later entered Ramallah and shooting erupted. Israeli armor also entered al-Am'ari refugee camp within the city after a helicopter gunship fired at targets there.

By dawn, Israeli tanks were 20 meters (yards) from the headquarters, Palestinian witnesses said.
Palestinian Information Minister Yasser Abed Rabbo said Sharon's son, Omri, had informed the Palestinians that Israel would reoccupy Ramallah but not attack Arafat's office.

"This is a major offensive aimed at reoccupying the West Bank and Gaza Strip," Abed Rabbo said. "Sending Zinni to the region was a maneuver because we believe the United States was informed of Sharon's major offensive and intentions."