Jan. 6 (Bloomberg) -- Israeli soldiers and Hamas gunmen engaged in pitched battles in the Gaza Strip, as diplomatic efforts to end the 11-day conflict failed to make headway.

Three Israeli soldiers were killed and 24 others wounded by a tank shell in a “friendly fire incident” in the northern region of Gaza, the military said in an e-mailed statement today. Another soldier may also have been killed by fire from his own forces. Israel lost one soldier in fighting with Hamas Jan. 4.

A rocket shot by Palestinian militants hit the city of Gedera, 45 kilometers (30 miles) northwest of Gaza, in the only reported such attack today. It is the longest a rocket has reached into Israel so far, said police spokesman Micky Rosenfeld, and the projectile caused light shrapnel wounds to a 3-month-old baby.

Altogether, over 520 missiles have struck Israel in the past 10 days, damaging dozens of homes and wounding more than 50 people, police said. In a campaign aimed at ending the rocket attacks, Israel is expanding its hold over the coastal territory it abandoned three years ago, deploying tank columns and thousands of troops in Gaza while continuing an aerial campaign.

At least 573 Palestinians have died in the conflict, some 50 in the overnight fighting, and 2,600 are wounded, said Mu’awia Hassanein, chief of emergency medical services in Gaza. Israeli strikes today hit two schools run by the United Nations in Gaza, killing five people, Agence France-Presse cited UN officials as saying.

Public Support

“It’s getting harder now that we’re suffering casualties but public support for this operation in Gaza isn’t going to really be affected,” Shmuel Sandler, a Bar Ilan University political scientist, said in a telephone interview. “People are so fed up after years of Hamas rockets and they’re happy that the army is doing something about it.”

The armed wing of Hamas issued a statement in Gaza saying it had “lots of surprises” waiting for Israel’s soldiers and would “fight against the aggression.”

Israeli Defense Minister Ehud Barak, speaking to reporters yesterday, vowed to continue the operation until Hamas stopped its rocket attacks on Israeli communities.

French President Nicolas Sarkozy met yesterday with Prime Minister Ehud Olmert in Jerusalem and Palestinian Authority President Mahmoud Abbas in the West Bank town of Ramallah to push for a cease-fire. Sarkozy, who also met with Egyptian President Hosni Mubarak yesterday, told reporters in Ramallah that he is working with Egypt on a “common initiative” to resolve the crisis.

United Nations officials say as many as a quarter of those Palestinians killed are civilians, a figure Israel disputes as too high.

Rocket Attacks

Thirty-seven rockets from Gaza struck Israeli territory yesterday, according to police spokesman Rosenfeld, down from a peak of 76 on Dec. 27, the first day of the operation.

As many as 3,200 rockets and mortar shells have been fired at Israel since the start of 2008. Rocket attacks have killed four Israelis since fighting began.

Last week, Israel rejected a French-proposed 48-hour truce with Hamas, saying it was seeking a permanent end to the Gaza rocket attacks.

As Israeli forces pressed on Gaza City, Abbas said in Ramallah that “we cannot accept the destruction of Hamas,” adding the group is part of the Palestinian people. Abbas is set to go to the UN today to make his case for a truce.

Rocket Range

“The last calm arrangement in the south was exploited by Hamas to double the range of their rockets,” said Prime Minister’s Office spokesman Mark Regev in a telephone interview today. “It is unacceptable that any cease-fire would allow them to further develop their rocket capabilities, and have Hamas rockets landing near Tel Aviv. Any quiet to be established in the south must contain as a fundamental condition the total and complete cessation of all arms transfers to Hamas,” he said.

Hamas seized control of Gaza in 2007 after a brief power- sharing arrangement with Abbas, of the rival Fatah movement.

Israeli armored forces captured the former Jewish settlement of Netzarim yesterday, splitting Gaza in two in the middle of the territory and isolating Gaza City in the north, Palestinian witnesses said. The army declined to comment.

The settlement was one of the last evacuated by Israel when it left Gaza in 2005. Palestinian security forces later used the land for a training camp.

“The Israelis surrounded Netzarim with tanks and seized control of the dunes inside,” according to Mohammed Arafat, who watched the operation from the fifth floor of his house in the Zeitun neighborhood of Gaza City.

Israeli Air Force

The Israeli air force attacked more than 40 targets throughout the Gaza Strip yesterday, including tunnels dug under the Egyptian border, weapon storage areas, among them houses of Hamas operatives, a number of weapons manufacturing sites and rocket launching areas, the army said in an e-mailed statement.

Israel has come under increasing international diplomatic pressure since the start of the ground operation.

Sarkozy told reporters in Ramallah that “because Israel is a great nation and a democracy, it can’t leave the humanitarian situation as it is today.”

Israel has allowed 400 trucks carrying 10,000 tons of food, medicine and other supplies into Gaza since the start of its military campaign, the Foreign Ministry said in an e-mailed statement, including 70 trucks yesterday.

Hamas, deemed a terrorist organization by the U.S. and the EU, said over the weekend it planned to send suicide bombers to Israeli cities and kidnap Israeli soldiers. One soldier, Corporal Gilad Shalit, has been held captive in Gaza for more than two years.

Halting Attacks

Israel began the campaign to halt rocket attacks after a six-month cease-fire with Hamas expired Dec. 19. Hamas refused to renew the truce because it said Israel hadn’t eased its economic blockade of Gaza. Militants fired 70 rockets at Israel the day before it ended.

During the truce with Hamas there was wholesale smuggling of Grad rockets from Iran, said Jeremy Issacharoff, deputy chief of mission in Israel’s Washington embassy.

“Iran was very kind with the Grad; it was too big to be smuggled so they broke them into four components to make it more ‘smuggler-friendly,’” he told reporters yesterday.

Iran’s assistance complemented a local Hamas “industry” of making shorter-ranged Qassam missiles, which have constituted most of the launchings, Issacharoff said.

The U.S. State Department said yesterday that any cease-fire must halt Hamas rocket attacks on Israel and deal with tunnels Hamas uses for smuggling.

On the Tel Aviv Stock Exchange, the benchmark TA-25 index rose 1 percent today, and has climbed more than 9 percent since Israel began its campaign against Hamas, tracking a global rally.

To contact the reporters on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net; Saud Abu Ramadan in Gaza City through the Tel Aviv newsroomt .

Last Updated: January 6, 2009 04:47 EST