Israeli raid on Gaza looks more likely: Olmert

BEN-GURION AIRPORT, Israel (Reuters) - Israeli Prime Minister Ehud Olmert said on Friday a major military operation into the Hamas-controlled Gaza Strip was looking more likely.

Hours after troops killed two Palestinian gunmen during an incursion into the Gaza Strip, the latest of many, Olmert said Israel might have to carry out a major action in the territory to counter cross-border militant rocket fire.

"At this moment the pendulum is swinging closer to military action in Gaza than anything else," Olmert said after returning from a three-day trip to the United States where he met President George W. Bush.

Egypt has so far failed to broker a truce to curb rocket and mortar attacks by militants on Israel and Israeli raids in the Gaza Strip, which is controlled by Islamist Hamas. The group seized the territory from secular Fatah a year ago.

The violence along the Gaza border has marred peace talks between Olmert and Palestinian President Mahmoud Abbas, who holds sway in the Israeli-occupied West Bank.

Hamas said in response to the comments that Olmert's comments were a sign that Israel had received U.S. permission to carry out actions in Gaza.

"Olmert's threats are proof that the U.S. has once again given ... a green light to launch a new round in the war against Gaza ... We take Olmert's threats seriously but they do not frighten us," Hamas spokesman Sami Abu Zuhri said.

Olmert, who is enmeshed in a corruption scandal that could force him to step down, has faced mounting pressure at home to launch a large-scale military operation in the Gaza Strip to stop the Palestinian militants' attacks.

Abu Zuhri said that an operation in Gaza would lead to Olmert's downfall "not because of the scandals but because of the graves of his soldiers that will have to be dug."

Olmert has denied wrongdoing in the corruption affair in which an American financier alleged in court testimony last month that he gave cash-filled envelopes to the Israeli leader in the days before he became prime minister.

He said the Israeli public would hear him speak on the matter in due course. He has said he would quit if indicted.

"When the time comes I'll have my say," Olmert told reporters on his return to Israel on Friday morning.

AIR STRIKES

Israel has tightened a blockade on the Gaza Strip and often conducts air strikes and raids into the territory which it says are aimed at ending frequent rocket and mortar fire at towns and agricultural communities close to the border.

An Israeli army spokeswoman said troops operating close to the border east of Gaza City spotted a group of armed men and fired at them. One was killed immediately and another died later of his wounds, Palestinian medics said.

An Israeli soldier was also wounded in the exchange, the Israeli spokeswoman said.

In an air strike earlier on Friday, a missile destroyed an outpost belonging to Hamas militants, critically wounding one gunman. A number of bystanders were also hurt, Hamas said.

A second air strike was aimed at a building suspected of being a munitions workshop in Gaza City. The army spokeswoman said the missile failed to hit its intended target.

The attacks came in response to cross-border mortar fire on an Israeli industrial plant near the Gaza frontier on Thursday which killed a factory worker. A young Palestinian girl was killed in an Israeli strike on Thursday.

(Additional by Nidal al-Mughrabi in Gaza; Writing by Ori Lewis; Editing by Dominic Evans)