Gaza/Tel Aviv  - Israel's air force continued pounding the Gaza Strip from the air Thursday, with its solders pressing on with attacks against militants on the ground.

Meanwhile, government officials who were in Cairo to discuss proposals for ending the fighting, which has lasted 13 days so far and claimed hundreds of fatalities, ended the talks without results, Egyptian foreign ministry officials said.

Tel Aviv/Beirut  - Unknown militants fired at least three Katyusha rockets into northern Israel early Thursday morning, prompting the Israeli army to return fire into south Lebanon, Israeli and Lebanese officials said.

An Israeli police spokesman said the Lebanese salvo lightly injured two people in the coastal city of Nahariya, 10 kilometres south of the border with Lebanon. Others were treated for shock.

One Katyusha hit the roof of a retirement home in the city, blowing a hole in the roof and shattering windows.

Washington  - US president-elect Barack Obama warned Thursday that the recession in the United States could grow "dramatically worse" and last for years unless "bold" policies are enacted to reverse the trend.

Unemployment could rise into double digits and the US economy could lose 1 trillion dollars of its capacity as the country copes with the poorest economic conditions since the Great Depression of the 1930s, Obama said.

Berlin - The German government will take a 25 per cent cent stake plus one share in the country's second biggest bank, Commerzbank, the bank announced Thursday.

Commerzbank said the move is in return for a fresh injection of capital by the state rescue fund Soffin, amounting to 10 billion euros (13.56 billion dollars).

Commerzbank, which is poised to take over rival Dresdner Bank at the end of January, has already received 8.2 billion euros in capital and guarantees of 15 billion euros from Soffin.

London - Arsenal manager Arsene Wenger said he expects to be without William Gallas and Mikael Silvestre for up to three weeks because of injury.

Gallas has a hamstring injury, while Silvestre suffered a thigh injury in the FA Cup win over Plymouth last weekend.

Wenger said Denilson and Toure would return for the visit of Bolton on Saturday.

"Kolo and Denilson will be back available," Wenger said. "However unfortunately we have lost William Gallas with a hamstring problem.

Moscow/Brussels  - Russian gas monopolist Gazprom and Ukraine's Naftogaz will sit for further face-to-face talks as soon as both leave Brussels on Thursday to fly to Moscow on the same airplane, Gazprom chief Alexei Miller said.

"We flew to Brussels on the same flight. That is why we don't need to hold special talks in Brussels. We plan to fly to Russia together," Miller was quoted by news agency Interfax as saying in Brussels.