(Adds Barak comment, paragraph 9) By Nidal al-Mughrabi GAZA, Dec 24 (Reuters) - An Israeli air strike killed a Hamas gunman in the Gaza Strip after Palestinian militants fired dozens of rockets and mortars into southern Israel on Wednesday, dampening prospects for a renewed ceasefire. Israeli Prime Minister Ehud Olmert's government said it had shown restraint until now but vowed to act if the salvoes continued. Aides to Olmert, who met his security cabinet, would not say what options were under discussion. Before nightfall, militants had fired more than 30 rockets and 30 mortar shells at Israel. While most fell in unpopulated areas, two struck homes, causing damage but no injuries. In addition to makeshift rockets that landed near the border, Hamas, the Islamist group that controls the Gaza Strip, said it fired two longer-range Grad rockets and threatened to expand the "circle of fire" deeper into Israel. An Israeli military spokesman said Wednesday's air strike hit a group of militants who had just fired mortars at Israel. Palestinian medical workers said one Hamas militant was killed in the strike and two other Palestinians were wounded, including a cameraman from Hamas's television station. Israel's Foreign Minister Tzipi Livni told her Kadima party that Israel would "change the reality" of the situation in Gaza. "There is a point when all nations and leadership say what we are saying tonight: It stops here," said Livni, who hopes to replace Olmert as prime minister in a February election. Israeli Defence Minister Ehud Barak said those responsible for attacks against Israelis would "pay a big price". The latest violence erupted on Tuesday night when Israeli soldiers killed three Hamas gunmen. The army said the men were preparing to plant explosives along the border. The rocket salvoes that followed, fired by Hamas and the Islamic Jihad militant group, prompted Israel to reverse its decision to allow aid supplies into the coastal enclave through border crossings controlled by the military. Israeli Defence Ministry official Peter Lerner said the crossings would remain closed until further notice. CONTINUED VIOLENCE Israel and Hamas have signalled interest in extending the six-month truce, which expired on Friday. But if violence along the border continues, both have threatened a wider confrontation that could result in heavy casualties on both sides. U.S. State Department spokesman Robert Wood told reporters Washington was supporting efforts by Egypt to restore calm and was concerned about the effect an escalation of tensions would have on the people in Gaza. "Hamas is still firing rockets into Israel and they're obviously not concerned about the impact of any potential major flare-up," he said, calling the militant group the "root cause" of the tensions. U.N. Secretary-General Ban Ki-moon condemned the rocket attacks and called on Hamas to ensure they ceased immediately. "(Ban) urges all parties to work to secure the immediate restoration of the calm and an urgent easing of humanitarian conditions in the Gaza Strip," a statement from Ban's spokesperson said. Hamas's armed wing, vowing to continue rocket attacks, said, "We warn the Zionist enemy that any new aggression against Gaza will blow up like a volcano in the face of the occupiers." Olmert has sought to tone down calls within Israel for a major Gaza offensive that could spark an international outcry and disrupt U.S.-backed peace talks. But Israeli officials suggested patience may be running out. Egyptian President Hosni Mubarak, whose country brokered the lapsed truce, planned to discuss prospects for renewing the truce during talks on Thursday in Cairo with Livni. Israel and Hamas trade blame over the ceasefire's collapse. (Writing by Joseph Nasr; Editing by Michael Roddy)
Palestinian relatives of Hamas gunman Mohammed Marouf mourn during his funeral in the town of Beit Lahiya in the northern Gaza Strip December 24, 2008. Palestinian militants in the Gaza Strip ...
