Israel shuts Gaza crossings but lets in cash

GAZA (Reuters) - Israel closed border crossings with the Gaza Strip on Tuesday in response to a cross-border rocket attack, but Palestinian officials said banks were able to bring in 68 million shekels ($19 million) to ease a cash shortage.

Hamas official Sami Abu Zuhri said the partial closure ran counter to an Egyptian-brokered truce which calls on Israel to ease its blockade of the coastal enclave in exchange for a halt to rocket attacks by Palestinian militants.

A rocket fired from the Hamas-controlled Gaza Strip on Monday struck near the centre of Sderot, a town in southern Israel often targeted by militants, causing no damage or injuries.

Such attacks have become rare since the truce took effect in June. Israel responded to the latest salvo by announcing that crossings with the Gaza Strip would be closed on Tuesday.

Governor of the Palestine Monetary Authority, Jihad al-Wazir, said the transfer of bank notes from the West Bank was allowed to enter Gaza only after Middle East envoy Tony Blair intervened and put pressure on Israel.

Israeli officials could not be reached to confirm the transfer.

The infusion of shekels will help replenish bank reserves, depleted last week when Palestinian President Mahmoud Abbas's West Bank-based government paid salaries to its employees in the coastal territory.

Palestinian officials had warned that Gaza banks would not have enough cash on hand for payday, but banks managed by borrowing among themselves to cover the withdrawals.

Israel tightened its cordon of the Gaza Strip a year ago after Hamas Islamists routed Fatah forces loyal to Abbas and seized control of the territory.

Abbas's government in the West Bank, headed by Prime Minister Salam Fayyad, faces a budget crisis because many Arab states have not met their financial commitments.

Hamas, which receives support from Iran and other Islamist allies, has paid its own workers in the Gaza Strip despite an international embargo over its refusal to renounce violence and recognize Israel.

(Additional reporting by Adam Entous and Joseph Nasr in Jerusalem, Mohammed Assadi in Ramallah; Writing by Adam Entous; edited by Richard Meares)