Hizbollah, which captured two Israelis soldiers and killed eight others last week, is seeking the release of Lebanese and Palestinian prisoners held by Israel. It has not commented on international efforts to halt the fighting.

Israel is demanding the disarming of Hizbollah in line with UN Security Council resolutions – a task that is beyond a fragile Lebanese government dependent on consensus among rival sectarian groups.

Lebanon, just emerging from three decades of Syrian tutelage, fears that any attempt to tackle Hizbollah directly would re-ignite civil war and split its army.

Hizbollah rocketed Haifa on Sunday, killing eight people in its deadliest attack on Israel, prompting Prime Minister Ehud Olmert to warn of far-reaching consequences for Lebanon.

Hizbollah chief Sayyed Hassan Nasrallah said the rocketing of Haifa, Israel’s third-biggest city, was retaliation for Israeli killing of civilians and promised more “surprises”.

Israel’s army later said Hizbollah rockets struck a town 50 km (33 miles) south of the border. Hizbollah said it had also rocketed the towns of Nahariya and Acre in northern Israel.

An Israeli army spokesman said Hizbollah had fired about 20 rockets at Israel overnight, wounding several people. More than 100 rockets had crashed across the border in 24 hours, it said. An Israeli newspaper said Israel’s offensive had so far destroyed a quarter of Hizbollah’s fighting capabilities.

It has also killed 179 people and wounded more than 500, Lebanon’s health ministry said. All but 13 of them were civilians. The dead include seven Canadians killed in a strike on a southern village on Sunday. Twenty-four Israelis have been killed in the fighting, including 12 civilians hit in rocket attacks.

France, the United States, Britain and a host of other nations scrambled to evacuate their citizens from Lebanon. More than 1,000 Germans, mostly of Lebanese origin, gathered in Beirut’s Hamra district yesterday to await evacuation. Thousands of foreigners have fled overland to Syria since Thursday, despite Israeli air strikes on main roads.

Echoing a muted call from the Group of Eight powers on Sunday, the European Union will urge all sides on Monday to work to end Middle East violence, according to a draft text. The EU text stopped short of demanding an immediate ceasefire.

Israel’s campaign in Lebanon followed the launch of its offensive in the Gaza Strip on June 28 to try to retrieve another captured soldier and halt Palestinian rocket fire.

Israeli air strikes yesterday flattened the eight-storey Palestinian Foreign Ministry building in Gaza City and gutted the offices of a Hamas-led force in the northern Gaza Strip. In the occupied West Bank, Palestinian gunmen ambushed a group of Israeli troops, killing one and wounding six others in the old city of Nablus, witnesses and military sources said.

Al-Aqsa Martyrs Brigades, an armed wing of President Mahmoud Abbas’s Fatah faction, claimed responsibility for the Nablus ambush, in which a bomb targeted an Israeli patrol.

<B>Lin NOUEIHED</B>