Israel minister warns Palestinians of "holocaust"

JERUSALEM (Reuters) - Israeli Deputy Defence Minister Matan Vilnai said on Friday the Palestinians would bring on themselves what he termed a bigger holocaust by stepping up rocket attacks on Israel from Gaza.

Tensions have escalated along the border with the Hamas-controlled Gaza Strip, where at least 32 Palestinians have been killed in two days of Israeli air strikes.

One Israeli in the Jewish state's southern town of Sderot was killed on Wednesday in a rocket attack.

"The more Qassam (rocket) fire intensifies and the rockets reach a longer range, (the Palestinians) will bring upon themselves a bigger holocaust because we will use all our might to defend ourselves," Vilnai told Army Radio.

The word holocaust is a term rarely used in Israel outside discussions of the Nazi genocide during World War Two. Many Israelis are loathe to countenance using the word to describe other contemporary events.

Israel has threatened to launch a broad offensive to try and stop militants in Gaza from firing rockets, which have reached deep into Ashkelon, a major southern city of 120,000 people.

The Islamist Hamas group's use of Soviet-designed Grad missiles, more powerful and accurate than improvised Gazan Qassams, has raised the stakes in the confrontation.

The Israeli army said it carried out a ground incursion into the northern Gaza Strip overnight and had shot at several gunmen. It declined to elaborate.

Israeli officials have threatened to target both militants who fire rockets as well as Hamas leaders

"Those who fire rockets at Israeli civilians will find that Israel will seek them out and neutralize them and their rocket launching squads," said Israeli government spokesman David Baker.

(Reporting by Joseph Nasr; Writing by Adam Entous and Joseph Nasr; Editing by Ralph Gowling)