* Gaza militants fire first rocket at Israel since truce * Further retaliation likely for soldier's death * New U.S. peace envoy holds talks in Israel By Allyn Fisher-Ilan JERUSALEM, Jan 28 (Reuters) - Israel warned on Wednesday of further retaliation for the killing of a soldier by Gaza militants, raising the prospect of more bloodshed as an envoy of U.S. President Barack Obama sought to consolidate a ceasefire. "Israel will respond very severely," an Israeli security source said. The Israeli air force carried out strikes during the night, but "we haven't seen it all," the source said. "We will remain ready, with our finger on the trigger around the clock," Benjamin Ben-Eliezer of Israel's decision-making security cabinet said on an Israeli television channel. Prime Minister Ehud Olmert was quoted as telling senior officials on Tuesday that Israel's response would be "severe and disproportionate". Defence Minister Ehud Barak said he had cancelled a trip to the United States "to closely follow these developments", adding: "The Israeli army is ready, as always." Obama's visiting Middle East envoy, former U.S. Senator George Mitchell, said it was "of critical importance that the ceasefire be extended and consolidated" between Israel and Hamas-ruled Gaza. But violence in the last two days has threatened the de facto truce in place since Jan. 18 when Israel and Hamas ordered separate ceasefires, ending a 22-day assault in Gaza and militant rocket fire at Israel. An Israeli military spokesman said a rocket launched from Gaza struck inside southern Israel. There were no casualties, but the shooting tested Israel ahead of a Feb. 10 election, in which security at the Gaza border is a prominent campaign issue. The cross-border fire came a day after an Islamist group claimed responsibility for a bomb which blew up an Israeli patrol jeep, killing one soldier and injuring three. The Hamas group defended the strike, citing the killing of two Palestinians by Israel last week. After the bombing, Israeli forces killed one Palestinian, identified by Gaza medical workers as a farmer. An Israeli air strike later seriously wounded a militant on a motorcycle. Aircraft returned to southern Gaza overnight to bomb tunnels under the Gaza-Egypt border which were targeted aggressively during the offensive, but are being quickly repaired. Mitchell met Olmert and other leaders in Jerusalem after talks in Cairo with Egypt's President Hosni Mubarak and was to hold talks on Thursday with Palestinian leaders, but not with Hamas. TWO STATES Mitchell said a durable truce must end smuggling into Gaza and reopen border crossings controlled by Israel to relieve its economic blockade of the enclave where half the 1.5 million people depend on food aid. He cited a U.S.-brokered 2005 agreement calling for forces loyal to Western-backed Palestinian President Mahmoud Abbas to be deployed in Gaza, from where they were driven out by Hamas militants in 2007. Olmert told Mitchell Israel would object to reopening any crossings with Gaza save to permit the flow of vital aid to the territory, until an Israeli soldier captured in 2006 was freed, an Israeli official said, speaking on condition of anonymity. Ben-Eliezer, the Israeli cabinet minister, confirmed this was Israel's position. "We don't intend to open the crossings before Gilad Shalit returns home," he said, giving the name of the soldier seized by Gaza militants in a cross-border raid. Barak, in a statement, said he had told Mitchell Israel cannot accept any attack on its citizens and would act with determination against any attack by Hamas or its allies. Mitchell planned to see Abbas on Thursday but Western diplomats said he would not meet officials of Hamas, which is shunned by Israel and the West for refusing to recognise the Jewish state, renounce violence and accept interim peace deals. Israeli leaders fear Hamas could rebuild tunnels under the Gaza-Egypt border to replenish an arsenal of rockets used in attacks on its southern communities that disrupt life for tens of thousands of citizens. Some 1,300 Palestinians, including at least 700 civilians, were killed in the offensive, the Hamas-run Health Ministry in the Gaza Strip said. Israel, which said it launched its assaults to stop rocket salvoes, put its death toll in the war at 10 soldiers and three civilians. "President Obama has said the United States is committed to Israel's security and to its right to defend itself against legitimate threats," Mitchell said in Jerusalem. "The president has also said the United States will sustain an active commitment toward reaching the goal of two states living side by side in peace and security," he added. (Writing by Douglas Hamilton, editing by Richard Williams)
Palestinians, whose houses were destroyed during Israel's offensive, wait to receive money distributed by Hamas in Jabalya in the northern Gaza Strip January 28, 2009. Hamas Islamists have started handing out ...
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