(Adds Olmert, Abbas comments) By Adam Entous JERUSALEM, June 27 (Reuters) - World powers named Tony Blair as their Middle East peace envoy on Wednesday, handing the outgoing British prime minister a daunting new challenge on a day Israeli forces killed 12 Palestinians in the Gaza Strip. The Quartet of international mediators -- the United States, United Nations, European Union and Russia -- made the announcement shortly after Blair handed power to party colleague Gordon Brown. Last-minute Russian hesitation was overcome. Blair, who led Britain for 10 years, has strong backing from U.S. President George W. Bush. Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas welcomed the appointment as an opportunity to revive stalled peace efforts. But the Islamist Hamas movement that routed Abbas's secular forces in Gaza two weeks ago, complicating efforts to found a Palestinian state in both the coastal enclave and the inland West Bank, derided Blair as pro-Israeli. Arab states also have reservations about a man who was Bush's closest ally over the 2003 invasion of Iraq. "The absolute priority is to try to give effect to what is now the consensus across the international community -- that the only way of bringing stability and peace to the Middle East is a two-state solution," Blair said on Wednesday. "I believe it is possible to do that but it will require a huge intensity of focus and work," Blair told Britain's parliament in his final appearance. The Quartet expected Blair to work with Abbas on building up institutions needed for a future state, diplomats said. With Gaza under Hamas control and effectively cut off from Abbas's Fatah-dominated West Bank, that is a major challenge. Blair would "mobilise international assistance for the Palestinians", U.N. spokeswoman Michele Montas said, adding he had "long demonstrated his commitment on these issues". Olmert's office said in a statement Blair's work as Quartet envoy could "allow for progress in the peace process". Abbas aide Nabil Abu Rdainah said the Palestinian president "hopes (Blair) can help relieve the suffering of our people and provide basic needs". CLASHES Israeli forces killed at least 12 Palestinians, mostly gunmen but also a 12-year-old boy and other civilians, on Wednesday in the deadliest raid in the Gaza Strip since Hamas seized the territory, medical workers said. Israel's operation in Gaza City and the southern town of Khan Younis appeared to signal it intended to keep strong military pressure on Hamas along with efforts to isolate the movement financially and politically. Hamas spokesman Fawzi Barhoum said the Israeli incursion was part of a "conspiracy in which Abbas is a participant and which is aimed at pressuring Hamas and the people of Gaza". Four of the nine militants killed in the Israeli operation belonged to Hamas. Gaza residents said gunmen fired rocket-propelled grenades and detonated explosive devices in confrontations with Israeli infantry and armour. Medical workers and residents said a shell fired by an Israeli tank exploded near a house in Gaza City, causing the deaths of the 12-year-old boy and two men. Their bodies were shredded by shrapnel. Residents said the men were civilians. An Israeli military spokesman said a tank shell fired in Gaza City's Shejaia neighbourhood was aimed at a gunman, and he had no information about a house being hit. Residents said tanks in the area later withdrew towards the Israeli frontier. Two Israeli soldiers were wounded by an anti-tank missile. Commenting on the Israeli raid, Abbas told reporters: "We strongly condemn these criminal acts, either in Gaza or the West Bank". Ghazi Hamad, an aide to Ismail Haniyeh, prime minister in the Hamas-led government dismissed by Abbas, said the movement did not expect Blair to be even-handed. "He has always adopted the American and Israeli positions," Hamad said. Hamas, which came to power through a 2006 election, has rejected Western demands to recognise Israel, renounce violence and accept existing interim Israeli-Palestinian peace deals. Israel pulled troops and settlers out of Gaza in 2005 but has not stopped air strikes and other attacks against militant groups that frequently fire rockets into southern Israel. (Additional reporting by Jeffrey Heller in Jerusalem and Haitham Tamimi in Ramallah)
