Rocket from Gaza wounds two Israeli girls

The strike showed that despite the renewal of foreign aid to Abbas' regime, Palestinians under his control are still in serious economic trouble.

So are Palestinians in Gaza, but many are united in blaming Israel for their troubles. Israel, for its part, planned to keep up its economic pressure on Gaza. Last week Israel's Supreme Court cleared the way for reduction in electricity supplies starting Thursday.

"We need to understand there is a war in the south," Vice Premier Haim Ramon told Israel Radio. "The war against Hamas has to be fought on all fronts."

It was unlikely that Abbas could press ahead with serious peace talks with Israel during a high-profile conflict between Israel and Hamas, forcing Abbas to periodically condemn Israeli attacks and measures in the name of Palestinian solidarity.

On Wednesday, Abbas condemned the rocket fire but urged Israel to let supplies in.

"These rockets that are being fired at Israel must stop. It's pointless," he said at a news conference with Austrian Foreign Minister Ursula Plassnik. "At the same time, Israel should not use these rockets as a pretext for collective punishment on Palestinians in Gaza."

In Gaza, the Hamas-dominated legislature canceled Wednesday's session, fearing an Israeli attack. The Israeli military refused to comment.

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