The Israeli soldier held by Palestinian armed men remains alive, an Israeli spokesman has said.

As a deadline passed, one of the groups holding Gilad Shalit said they would not kill him, but there would be no more talks.

The kidnappers had given Israel until 0300 GMT to comply with their demand to begin freeing Palestinian prisoners or face unspecified consequences.

Israeli Prime Minister Ehud Olmert said he would not give in to "extortion".

Missiles hit the Gaza Strip twice early on Tuesday as Israel continued air strikes for the seventh night.

Hamas' Izzedine al-Qassam Brigades, the Popular Resistance Committees and the little-known Islamic Army say they are holding Cpl Shalit.

The three groups have demanded that all Palestinian women and young prisoners be released along with 1,000 male prisoners in exchange for information about Cpl Shalit's welfare - a demand Israel has rejected.

University hit

Israel has carried out nightly air strikes against Palestinian targets and infrastructure in Gaza, including knocking out its only power plant.