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Associated Press
PA relative of Motasem Abdrabo, who was killed during an Israeli strike, is overcome at his funeral in the Gaza Strip.

GAZA CITY, Gaza Strip — It was the middle of the night when the battle between Israeli forces and Palestinian militants reached Tareq Dardouna's house in northern Gaza.

Tending to four wounded people as children cried and screamed, he told of a relative who was killed.

"His body is still on the ground," Dardouna said in a telephone interview. "Ambulances tried to come, but they came under fire.... We are in a real war."

At least 54 Palestinians, about half of them civilians, were killed Saturday in the deadliest day in Gaza since the current round of fighting erupted in 2000.

Israeli forces went on the offensive to try to stop daily rocket barrages that have reached closer to its populated heartland than ever before. Two Israel soldiers were killed and seven were wounded in the clashes, the military said.

Many of the civilians were caught in crossfires, like those in Dardouna's neighborhood, but Palestinians charged the Israelis were firing indiscriminately, labeling the offensive with emotionally charged terms — "genocide" and "holocaust."

The swelling violence came amid Israeli threats to launch a broad invasion of Gaza, and threatened to swallow up Secretary of State Condoleezza Rice's peacekeeping mission to the region next week.

In Washington, National Security Council spokesman Gordon Johndroe expressed regret for loss of civilian life on both sides but put most of the blame on the Palestinians.

"There is a clear distinction between terrorist rocket attacks that target civilians and action in self-defense," he said in a statement.

The U.N. Security Council met Saturday night behind closed doors in emergency session at the request of the Palestinians and their Arab supporters.

Early today, Israeli aircraft destroyed the office building in Gaza City used by Hamas Prime Minister Ismail Haniyeh, witnesses said. Five people were lightly wounded in the raid.

While expressing regret for civilian casualties, Israeli Defense Minister Ehud Barak blamed "Hamas and those firing rockets at Israel," the statement said, pledging to continue the offensive to protect Israeli towns and cities.

On Friday, Israeli Deputy Defense Minister Matan Vilnai renewed a threat to invade Gaza to crush militant rocket squads that attack southern Israel daily.

At least two dozen Palestinian civilians, including a baby, were among those killed, and militants said 25 fighters died. Health officials said about 200 people were wounded, 14 of them critically.

The overall death toll was the highest in a single day since the current round of violence erupted in September 2000. The highest previous death toll was 38 on March 8, 2002.

The intense fighting Saturday pushed the Palestinian death toll to more than 80 since fighting flared Wednesday. About half of those were civilians.

Palestinian fighters kept up a steady stream of rocket and mortar attacks on Israeli targets, firing around 50 on Saturday alone in defiance of the Israeli assault. Six Israelis were injured by rockets that reached as far as Ashkelon, a coastal city 11 miles north of Gaza.

The Israeli military said one of its airstrikes on northern Gaza targeted a parked truck loaded with 160 rockets.

On Thursday, militants raised the stakes by firing Iranian-made rockets into Ashkelon, striking closer to Israel's heartland than ever before and putting more Israelis at risk. Palestinian rocket fire earlier in the week also killed an Israeli man.

Shortly before midnight Friday in the northern town of Beit Hanoun, a 13-month-old girl was killed by shrapnel. Hamas blamed Israel, but residents said a militant rocket fell short and landed near the baby's house. The day's violence snowballed from that point on.

Before dawn Saturday, the battleground shifted to the town of Jebaliya and its nearby refugee camp, a center of militant activity in northern Gaza.

Soldiers backed by tanks and aircraft conducted house-to-house searches and took up positions on rooftops as they clashed with militants detonating land mines and firing heavy machine guns, assault rifles and mortar rounds.

A wounded man and boy lay in a gutter near a dead man. Ambulance workers took away the dead man as a youth appealed to paramedics to treat the wounded.

"Take them, they are still alive," he pleaded. Another man urged the wounded to "bear witness," or proclaim their Muslim faith before they die. The two began reciting a Muslim prayer near a boy whose lower body was ripped by shrapnel.

All but the most critically injured were sent home from Shifa Hospital, Gaza's largest. Beds crammed hospital corridors, and the intensive care unit was overflowing, a doctor at the hospital said. The doctors union urged its members to cancel leaves and appealed for blood donations.

The U.N. shuttered 37 schools it runs in northern Gaza because of the fighting, affecting some 40,000 students, said Christopher Gunness, a U.N. official. A three-day strike was declared in Gaza, and publicly run schools and universities were closed.

Mosques across northern Gaza and Hamas-affiliated radio appealed to civilians to stay home. Hamas closed off roads to evacuate security compounds and to keep residents away from potential airstrike targets. They also turned off street lights, apparently so militants wouldn't be seen from the air.

Chief Palestinian negotiator Ahmed Qureia said Palestinian leaders including Abbas recommended suspending peace talks at a meeting Saturday in the West Bank town of Ramallah.

"I think it will be suspended," Qureia said. "What is happening in Gaza is a massacre of civilians, women and children, a collective killing, genocide," Qureia added. "We can't bear what the Israelis are doing, and what the Israelis are doing doesn't led the peace process any credibility."

Hamas remained defiant and vowed to retaliate.

In Syria, exiled Hamas leader Khaled Mashaal described Israeli attacks against civilians in Gaza as "the real Holocaust."

"If (Israeli officials) decided stupidly to invade Gaza, we will fight them with God's help," Mashaal told reporters from his base in Damascus. "We will fight them like lions."

Mashaal blamed the rival Fatah, headed by Abbas, for helping along Israel's attacks.

Israeli officials met Saturday to discuss the Gaza violence and its implications for peacemaking. Foreign Ministry spokesman Arye Mekel said talks didn't preclude fighting. Talks are "based on the understanding that when advancing the peace process with pragmatic (Palestinian) sources, Israel will continue to fight terror that hurts its people," he said.

Vice Premier Haim Ramon told Channel 2 TV that Israel should fight in Gaza, but not reoccupy it. Israel pulled its troops and settlers out of the tiny seaside territory in late 2005, but militants proceeded to fire rockets from the abandoned territory at Israeli communities.

Contributing: Edith M. Lederer at the United Nations