Gaza City, Jan. 6 : A Hamas leader has warned that Islamists would kill Jewish children anywhere in the world in revenge for Israel's devastating assault on the Gaza Strip.

"They have legitimized the murder of their own children by killing the children of Palestine. They have legitimised the killing of their people all over the world by killing our people," The Times quoted Mahmoud Zahar, as saying in a televised broadcast recorded at a secret location.

His comments came as explosions and flares from the pitched battle on its northern fringes illuminated the sky above Gaza, where Israeli tanks, helicopters and artillery fought to dislodge Hamas guerrillas.

According to witnesses, the battle has spilled into Gaza City itself.

Israeli military said last night that three of its soldiers were killed and 24 wounded by a shell from one of its own tanks in a battle near Gaza City.

Meanwhile, Abu Obeida, the leader of the Hamas's military wing, said that his outfit is prepared to wage a pitched battle with Israeli troops "in each corner of the street and will welcome you with fire and iron."

Despite growing international calls for a ceasefire, neither side has shown the slightest intention of backing down.

Israel, supported by the outgoing Bush Administration in the United States, rejected European calls for an immediate ceasefire reiterated during a peace mission by President Sarkozy of France.

Israel argues that it needs to break Hamas's military capacity if a durable ceasefire is to be negotiated.

"We cannot accept a compromise that will allow Hamas to fire \ against Israeli towns in two months' time," Prime Minister Ehud Olmert told Sarkozy last night.

Sarkozy, part of a high-level EU effort in the region to negotiate a truce, told Israel that "the violence must halt".

Sarkozy ran foul of Hamas when he said that it must bear most of the blame for the increasingly miserable plight of the 1.5 million Gazans it rules over.

Mahmoud Abbas, the Palestinian President and Fatah leader, whom he met in Ramallah yesterday, also called for an unconditional truce.

Hamas, meanwhile, kept firing rockets into southern Israel, launching about 40 of its homemade Qassam rockets and more sophisticated Grad missiles.

They again hit Beersheba, about 25 miles from Gaza. While Israeli forces have stormed into the northeastern area of the Strip, from where Hamas usually launches its projectiles, the Islamists have maintained their fire from within Gaza City.

Many analysts believe that Hamas wants to goad Israel into its stronghold, a hellish landscape for urban combat, which the Islamists have had 18 months to prime with booby traps, ambushes and tunnels. (ANI)