By Nidal al-Mughrabi GAZA, June 10 (Reuters) - Rival Palestinian factions battled in the Gaza Strip on Sunday, raising the weekend death toll to at least two and 40 injured in the fiercest internal fighting since a ceasefire was declared nearly a month ago. Hours after Palestinian militants from the Gaza Strip infiltrated into Israel at a key border crossing, Israeli aircraft bombed a building used by Islamic Jihad, causing two injuries, local residents said. The army confirmed the air strike targeted Islamic Jihad, which took part in Saturday's cross-border raid. The army said a separate air strike targeted a weapons production facility used by a militant offshoot of Fatah which joined Islamic Jihad in the raid. Local residents said a dairy truck was hit but no one was hurt. The heaviest fighting between the ruling Hamas Islamist group and President Mahmoud Abbas's secular Fatah faction took place in the southern Gaza town of Rafah, where hundreds of rival gunmen took up positions on street corners and rooftops. Hamas and Fatah pounded each other's positions with rocket-propelled grenades and machineguns, according to local residents, who took shelter indoors as the rivals fought block by block. Of the more than 40 Palestinians wounded in the fighting, at least 10 were in critical condition, hospital officials said. The number of injured overwhelmed the local hospital, forcing officials to send people to neighbouring towns for treatment. Tensions have remained high in Gaza since an Egyptian-brokered ceasefire took effect in mid-May. Some 50 Palestinians died in internal fighting last month alone. Egyptian officials have been holding talks in Cairo with leaders from both factions but no agreements have been reached. Hamas said the fighting started on Saturday night when Fatah gunmen shot dead a local Hamas commander in Rafah. Fatah said the fighting started when Hamas used rocket-propelled grenades and explosives to destroy the homes of two Fatah militants. Rafah was also the scene of factional fighting on Thursday in which a Fatah supporter was killed. The Bush administration has made strengthening Abbas's forces a top priority, and has earmarked tens of millions of U.S. taxpayer dollars to provide his elite Presidential Guard with training and non-lethal equipment. Fatah leaders have asked Israel to allow a new shipment of arms and ammunition into Gaza from Egypt and other Arab states, drawing protests from Prime Minister Ismail Haniyeh of Hamas. The Bush administration has asked Israel to permit transfers to bolster Abbas's forces as a counterweight to Hamas's dominance in the Gaza Strip. U.S. and Israeli security officials say Hamas's Executive Force and armed wing receive money, weapons and training from Iran and other Islamist allies. The once dominant Fatah entered a unity government in March with Hamas, victors in a parliamentary election 18 months ago, in an effort to end internal faction fighting and to help ease international sanctions imposed after Hamas took power. The embargo has begun to ease but tensions between the factions has not. An estimated 616 Palestinians have been killed in factional fighting since Hamas defeated Fatah in elections in January 2006, a leading Palestinian rights group said in a report on Wednesday.
