Defiant Palestinian resistance activists fired more rockets into southern Israel after 12 people were killed in the deepest Israeli raid into Gaza City since the Palestinian Authority was created in 1994, just 48 hours ahead of Israel's elections. The Katyusha-style unguided missiles caused no damage or injuries as they crashed into fields close to the Israeli town of Sderot across the Gaza border, police said.

Israeli Defence Minister Shaul Mofaz had justified the occupation army's overnight raid as an attempt to smash metal workshop allegedly making Qassam rockets, seven of which were launched at Israel on Friday without causing casualties.

Mofaz warned of more operations in the densely populated Gaza Strip and the West Bank and hinted that Israel could fully re-occupy the Gaza Strip as it has most of the West Bank for the past seven months, Israeli radio said.

Chief Palestinian negotiator Saeb Erekat called the raid, by more than 25 tanks and other armoured vehicles backed by helicopter gunships, a demonstration of force linked to Tuesday's Israeli general elections, which right-wing Prime Minister Ariel Sharon is tipped to win.

Hospital sources said 12 Palestinians were killed and 64 injured, six of them seriously, in exchanges of fire between armed Palestinians and Israeli units, which rolled into Gaza City from three directions.

At least Palestinian officials identified one of the victims as an unarmed man, but the others killed and wounded may have been Palestinian fighters, including an activist from the resistance group Hamas.

Israeli occupation army officials said the occupation army operation met strong resistance, including from automatic weapons fire, anti-tank grenades and explosives charges.

The Israelis suffered no casualties in the pitched battle.

Palestinians said more than 50 metal workshops were wrecked, as well as 80 small stores, three houses, a restaurant and a supermarket. Israel said more than 100 metalworking machines were destroyed.

Later in the southern Gaza town of Rafah, a six-year-old Palestinian boy was killed and his five-year-old brother wounded by machinegun fire from tanks close to the Israeli-controlled border with Egypt, Palestinian officials said.

The latest deaths brought to 2,898 the number of people killed since the outbreak of the Palestinian intifadha, or uprising, 28 months ago, including 2,155 Palestinians and 687 Israelis.

Some 20,000 people turned out for the funerals of the 12 slain in Gaza City, many firing in the air and calling for vengeance.

Qassam rockets were fired on Friday from Beit Hanoun at the town of Sderot in Israel's Negev desert, sparking Israeli retaliation in which four road bridges linking Beit Hanoun to Gaza City were blown up to isolate the area.

Hamas' armed wing, the Ezzedin al-Qassam Brigades, for whom the rockets are named, warned Sderot's residents to "leave your town or hide in the shelters. Our fighters will hit any time during incursions or tank shelling."

Israeli occupation forces scouring the northern Gaza Strip found seven more Qassam rockets aimed at Israel and ready to fire, while tanks injured two Palestinians trying to repair the road bridges in Beit Hanoun.

Despite the discovery of the rockets, four more landed in Israel Sunday in a challenge to the Israeli occupation army.

Hamas leader Abdelaziz Rantissi also called for more resistance bombings in response to the latest raid.

Erekat called for outside help for the Palestinians, saying, "If the international community remains silent, Israel will go even further."

He accused Sharon of seeking to ensure victory at the polls through a show of force on the eve of the elections.

Latest opinion polls suggest Sharon's Likud party will win, but that the premier will have difficulty stitching together a stable coalition.

An aide to Palestinian leader Yasser Arafat, Nabil Abu Rudeina, said the Palestinians would call for a UN Security Council meeting to condemn "this new daily war against Gaza," which he said sabotaged Cairo talks which could call for an end to attacks which have triggered such a massive Israeli response.

Israel sealed off its frontiers with the Palestinian territories until after Tuesday's elections.

Meanwhile US Secretary of State Colin Powell said a Palestinian state was "possible" by the year 2005 and that the United States is committed to achieving the target.

PHOTO CAPTION

Palestinian mourners escort the coffin of Saed Kahail, 23, to Gaza City's al-Sheikh Redwan cem