(Updates death toll, adds Fayyad comments) By Adam Entous JERUSALEM, June 11 (Reuters) - Israel said on Wednesday it would support efforts by Egypt to reach a truce in the Gaza Strip but instructed the army to prepare for possible military action in the Hamas-controlled territory if mediation failed. The decision by Prime Minister Ehud Olmert's Security Cabinet to hold off militarily for now followed Hamas's release this week of a hand-written letter by Gilad Shalit, an Israeli soldier captured by Gaza militants two years ago. But it came against a backdrop of escalating violence in which Israeli forces on Wednesday killed four Palestinians in the coastal enclave, including a 9-year-old girl. Israel has been pressing for progress on the Shalit case and an end to Hamas weapons smuggling as conditions for a truce that would aim to stop Gaza rocket attacks and Israeli incursions. Hamas, which has demanded Israel ease its Gaza blockade in return for calm, said the Security Cabinet decision was "not serious" because of Israel's threat of a large-scale operation if its conditions were not met and truce talks collapsed. U.S. Secretary of State Condoleezza Rice, who has backed the Egyptian mediation effort, plans to return to the region this weekend to try to spur peace talks between Olmert and Palestinian President Mahmoud Abbas. Those talks have been marred by disputes over Jewish settlement building, violence in the Gaza Strip and a corruption scandal that threatens to force Olmert from office. Abbas had cautioned against any Gaza incursion, saying such violence could doom Palestinian statehood talks which the United States hopes can achieve a framework deal this year. Speaking to reporters ahead of Rice's visit, the head of Abbas's government, Prime Minister Salam Fayyad, said he believed it would be impossible to reach a peace deal in 2008. "I have a strong feeling that is tantamount to certainty that a solution won't be achieved this year," Fayyad told reporters. "QUICK PREPARATIONS" "The Security Cabinet decided this morning to support Egyptian efforts to achieve calm in the south and to end the daily targeting of Israeli civilians by the terrorists in Gaza," said Olmert's spokesman, Mark Regev. "In parallel, the Security Cabinet has instructed the military to continue its preparations in the unfortunate event that the Egyptian track should prove unsuccessful," he added, alluding to a possible broad military operation in Gaza. A Security Cabinet statement said Defence Minister Ehud Barak would oversee talks with Egypt while the army makes "quick preparations" for military action if ordered. Hamas spokesman Sami Abu Zuhri said the group was prepared for either outcome -- full calm or a confrontation. "They are preparing for a large-scale attack on Gaza and that makes any talk about giving calm a chance unserious and unreal," he said. The Security Cabinet's decision appeared at odds with sabre-rattling by Olmert and other cabinet ministers. Speaking before the decision, Olmert's deputy, Vice Premier Haim Ramon, said a broad operation in the Gaza Strip was the only way to end Hamas's reign. After talks last week in Washington, Olmert said "the pendulum is swinging closer to military action in Gaza than anything else". Egypt has been trying for months to broker a truce between Israel and Hamas, which seized the Gaza Strip from Abbas's secular Fatah faction a year ago. Olmert refuses to negotiate directly with Hamas, which has spurned Western demands to recognise Israel and end violence. Olmert has faced mounting pressure at home to invade the Gaza Strip to stop Palestinian rocket attacks that have caused several deaths in recent months and disrupted life in parts of southern Israel. More than 360 Palestinians in the Gaza Strip have died this year in Israeli attacks, over a third of them civilians, according to Israeli rights group B'Tselem. (Additional reporting by Nidal al-Mughrabi in Gaza and Wafa Amr in Ramallah; Editing by Jeffrey Heller and Keith Weir)
Palestinian youths throw stones at Israeli border police officers during a protest against the construction of Israel's controversial barrier in the West Bank village of Nilleen, near Ramallah, June 4, 2008. ...
