(Corrects spelling of berthed in seventh paragraph.)

July 17 (Bloomberg) -- Israeli warplanes struck Hezbollah bases in Lebanon after rockets hit Haifa and the United Nations considered a peacekeeping force for the region.

Bases in the eastern Lebanese city of Baalbek and a fuel tank in Beirut's port were bombed after as many as 30 Hezbollah rockets hit Haifa, Israel's third largest city, and nearby targets in northern Israel.

In its largest operation in Lebanon since 1982, Israel launched the attack after Hezbollah captured two soldiers July 12, two weeks after an Israeli offensive into the Gaza Strip to rescue a third soldier abducted by Palestinians. The fighting pushed oil prices to record highs and sent stock markets in the region and elsewhere lower.

Italy and the U.K. sent warships into the eastern Mediterranean as most of the Group of Eight countries made plans to evacuate their citizens from Lebanon and Israel. The UN Security Council began meeting in closed session in New York as Secretary General Kofi Annan pressed the body to approve a force to quell the violence. Sky News said the U.S. was sending ships to evacuate its citizens from Lebanon.

Twelve people were killed when an Israeli missile struck a mini-bus south of Beirut late today, bringing the total number killed in Lebanon to 42 since the morning, Al Arabiya television said, citing reporters.

Rockets fell on Haifa, Israel's third-largest city, this afternoon, the army spokeswoman said. The rockets, which also landed in other northern towns, caused part of a three-storey building to collapse and injured six people, police spokesman Micky Rosenfeld, said by telephone. Haifa is the site of Israel's largest oil refinery.

Haifa Port Closes

Haifa port, Israel's biggest, ceased operations today and the two vessels berthed there left, an official for the state- owned Haifa Port Co., who asked not to be identified, said by telephone today. She said officials will decide whether to continue the closure tomorrow.

U.K. Prime Minister Tony Blair urged governments to increase pressure on Syria and Iran to help quell the fighting in the Middle East, saying the region faces a ``really dangerous situation'' if the conflict escalates.

``My worry that this whole business is not coincidental. Something is happening here that is creating conflict,'' Blair told a news conference at the Group of Eight summit in St. Petersburg today. ``It is an attempt to broaden the conflict out Any country that has influence over Hezbollah should use it.''

Sky News, citing an unidentified Israeli official, said that hostilities would cease if Hezbollah withdraws and ended rocket attacks and captured soldiers are freed.

U.S. Ambassador John Bolton cast doubt on the idea of sending UN peacekeeping troops into southern Lebanon, questioning whether such a force could disarm Hezbollah or cut off their Iranian and Syrian support.

Security Council Meets

The American ambassador's remarks came as the Security Council began a closed meeting on the conflict, and after UN Secretary-General Kofi Annan pressed the council's five permanent members to contribute to a force that would quell the escalation of violence.

Israel will strike Lebanon's electrical infrastructure if Hezbollah rockets hit Haifa's petrochemicals plants, Israel Radio said, citing an unidentified senior army officer. Until now, Israel hasn't knocked out Lebanon's electrical system in order not to undermine the Lebanese government, the officer said, according to the radio.

The fighting has sent crude oil prices to a record and contributed to stock market declines. Crude oil for August delivery fell 38 cents, or 0.5 percent, to $76.65 a barrel at 10:02 a.m. on the New York Mercantile Exchange. Futures touched $78.40 on July 14, the highest since trading began in 19 83. Prices are up 33 percent from a year ago.

European Stocks

European stocks fell for a third day, the longest losing streak in two months, as near-record oil prices and conflict in the Middle East lessened the appeal of riskier investments such as equities. The Dow Jones Stoxx 600 Index lost 1.1 percent to 310.59 at 4:02 p.m. in London.

In Turkey, the ISE National-100 Index closed down 3.3 percent. Israel's benchmark Tel Aviv-25 Index closed down 0.9 percent. The Beirut Stock Exchange was closed.

Hezbollah in Lebanon and Hamas in the Gaza Strip are seeking to destabilize the Middle East, the G-8 leaders said yesterday at their summit in St. Petersburg, Russia. Both groups are classified as terrorist organizations by the U.S. and the EU. Iran and Syria are acknowledged by some western leaders as sponsors and supporters of Hezbollah and Hamas.

Gaza Strip

Israel unilaterally withdrew from the Gaza Strip in 2005, razing Jewish settlements it established after seizing the area from Egypt in the Six-Day War of 1967. Israel hasn't launched a full-scale military attack on Lebanon or Hezbollah since it pulled its troops out of a swathe of southern Lebanon held for 18 years until May 2000.

Since 1978, the UN has stationed peacekeeping forces in a southern strip of Lebanon to ensure ``international peace and security'' and enable the government to restore its authority. The United Nations Interim Force in Lebanon, or Unifil, now has about 1,990 troops in the country, according to its Web site.

The U.S. failed to get the other leaders to go along with explicitly accusing Syria and Iran of complicity in the conflict. The G-8 document adopted a key U.S. position by asserting that Israel has the right to defend itself from rocket attacks fired from Hezbollah positions in southern Lebanon.

Syria said it would strike back if Israel attacked. ``Of course Syria will retaliate,'' Syrian Information Minister Mohsen Bilal told the British Broadcasting Corp. today.

Iran Calls

Iranian Foreign Minister Manouchehr Mottaki today called on Israel and Hezbollah to reach a truce. ``A truce can be established followed by an exchange of prisoners,'' Mottaki told reporters after talks with Syrian leaders in Damascus.

Israel will support a ``more energetic international effort'' to bring about implementation of UN resolutions calling for the disarming of Hezbollah, Foreign Ministry spokesman Mark Regev said in response to Annan's proposal.

At least 142 Lebanese civilians have been killed since the conflict began, Lebanese police said. Twenty-four Israelis have also been killed. Yesterday, a rocket attack on Haifa killed eight railroad workers in a maintenance garage at the central train station, the Israeli army said.

The only kind of international force that will make a difference in Lebanon will be one ready to ``kill and be killed,'' said Mark Heller, principal research associate at the Jaffee Center for Strategic Studies in Tel Aviv. ``We need an effective intervention that will fight the current force.''

Gaza Bombed

Israel's air force bombed the Palestinian Foreign Ministry in Gaza early today and targeted rocket launchers after Qassam missiles hit two southern towns, the army said. Palestinians reported one civilian death.

In the West Bank city of Nablus, an Israeli soldier was killed and another wounded when Palestinian gunmen threw an explosive device at a patrol, the army said.

Police in downtown Jerusalem stopped a Palestinian youth carrying an explosive device, Rosenfeld said. Two Israelis were injured by Palestinian rockets launched from the Gaza Strip while another rocket hit an industrial area near the city of Ashkelon.

Rockets fired from Lebanon by Hezbollah struck today in areas of Galilee's Jezreel Valley about 50 kilometers (31 miles) inside Israel, the longest such strikes since the conflict began, an army spokeswoman said.

To contact the reporters on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net; Dania Saadi in Cairo at at dsaadi2@bloomberg.net

Last Updated: July 17, 2006 13:27 EDT