Eyewitnesses and security sources reported that Israeli aircrafts fired at least seven missiles at the neighborhood. The Lebanese Army responded with anti-aircraft fire. Residents heard at least three strikes. Lebanese security sources also reported that Israeli planes struck the main highway leading to Beirut's international airport and south Lebanon.

Other news reports said a playground where Hizbullah leaders hold rallies for thousands of their supporters was also targeted.

Israel Defense Forces officials confirmed that the army had struck targets in Beirut.

On Friday morning, the Lebanon police reported that IAF aircrafts attacked a base of Ahmed Jibril's organization, the Popular Front for the Liberation of Palestine - General Command, at the Bekaa Valley, only 2 kilometers (1.24 miles) away from the Syrian border.

Earlier, Israeli planes struck the main highway linking Beirut to the Syrian capital Damascus, a Lebanese security source said.

The jets struck at least five separate times along different points of the international route, the source said.

Witnesses said the road was clear of traffic after earlier congestion as tourists fled Lebanon to neighboring Syria.

IDF officials said Friday morning that "targets at the Hizbullah organization's main headquarter in Beirut were struck from the air. The IDF attacked the security building and the guard at the organization's main headquarters. In addition, the IDF attacked the bridges and access routes to the area."

According to the army, "the center attacked releases orders and instructions and conducts terror activities."

Israeli officials said on Thursday that Israeli forces planned to strike the key highway as part of an assault aimed at retrieving two soldiers seized by Lebanese Hizbullah guerrillas.

Israel had already bombed Lebanon's airports and blockaded the country from the sea, bringing trade and tourism to a halt.

Lebanese officials said Israeli aircraft dispersed thousands of leaflets above the Shiite-dominated areas of southern Beirut warning citizens to stay clear of Hizbullah offices and operatives.

"For your own safety and because of our desire not to harm any civilians who are not involved (with Hizbullah), you should refrain from staying in areas where Hizbullah is present and operating," said the Arabic-language leaflets, signed "The State of Israel".

'We have no intention of seeking revenge'

Eyewitnesses said hundreds of residents were seen leaving the capital.

IDF sources said several senior Hizbullah members have gone into hiding.

"We assume Hizbullah will continue to launch attacks, also on Haifa, but at the end of the day the organization will be defeated," one official said.

Beirut's Dahiya neighborhood, a Hizbullah stronghold, has been marked as the IDF's key target for the next 24 hours.

The organization maintains several weapons cashes and its headquarters in the neighborhood.

"We have no intention of seeking revenge, but to simply strike what is dearest and most important to Hizbullah," a military source said.

The security establishment decided to intensify the attacks in Lebanon after a 122 millimeter missile was fired at Haifa.

"This is a simple upgraded Katyusha," an army source said. "Hizbullah has more of these Katyushas, and it may launch them."

'We must remain patient'

The IDF rejected Hizbullah's claims that it was not behind the missile attack, saying it had proof the organization did in fact launch the missile toward Haifa. A similar Katyusha was fired just hours earlier at Carmiel.



Lebanon has asked for an immediate ceasefire, but a senior Northern Command officer said "we do not intend to respond positively until the operation's objectives have been attained. The resident of the north understand this and are willing to accept the disruption of their daily lives, including the cancellation of summer camps.

"We must remain patient; the operation began only 24 hours ago," he said.

IDF sources said that after Hizbullah stated that "If Beirut or its suburbs will sustain Israeli attacks, we will attack Haifa," it will not show restraint in its actions against the organization.

"We hold Lebanon, which allows Hizbullah to operate from its capital, responsible for the attacks on the north," an IDF official said.

Israel's target was Hezbollah, the Iranian-backed militant Shiite faction which has a free hand in southern Lebanon and also holds seats in parliament. Hezbollah sparked the current conflict Wednesday with a cross-border raid that captured two of Israel's soldiers.

Israel said it was determined to beat Hezbollah back and deny the militant fighters positions they have held along the border since 2000.

The Lebanese government, caught in the middle, pleaded for a cease-fire.

"If the government of Lebanon fails to deploy its forces, as is expected of a sovereign government, we shall not allow Hezbollah forces to remain any further on the borders of the state of Israel," Israeli Defense Minister Amir Peretz said.

Israeli analysts warned that Syria, which supports Hezbollah and plays host to Hamas' political leader Khaled Mashaal, could be Israel's next target.

Iranian President Mahmoud Ahmadinejad said any Israeli attack against Syria would be an aggression on the whole Islamic world and warned of a harsh reaction, the official Iranian news agency reported Friday.

Israel's offensive was among its heaviest in Lebanon since it invaded the neighboring country and occupied its capital 24 years ago. Two days of Israeli bombings killed 45 Lebanese and two Kuwaitis and wounded 103. Two Israeli civilians and eight Israeli soldiers have also been killed, the military's highest death toll in four years.

With Beirut's international airport closed after Israeli bombs ripped apart its runway, many tourists were trapped while others drove over the mountains to Syria - though Israeli warplanes struck the highway linking Beirut to the Syrian capital of Damascus early Friday, closing the country's main artery and further isolating Lebanon from the outside world.

Beirut residents stayed indoors, leaving the streets of the capital largely empty. Others packed supermarkets to stock up on goods. Long lines formed on gas stations, with many quickly running out of gas.

Israel said its attacks were to prevent the movement of the captured soldiers and hamper Hezbollah's military capacity. It said it had information Hezbollah was trying to take the two soldiers to its ally, Iran - an allegation denied by the Iranian Foreign Ministry.

Fears mounted among Arab and European governments that violence in Lebanon could spiral out of control in a volatile region already torn by conflicts in Iraq and in Gaza. Israel launched an offensive in Gaza against Hamas, whose fighters are holding another Israeli soldier captured two weeks ago.

The shockwaves from the fighting on two fronts began to be felt as oil prices surged Thursday to a record above $78 a barrel in world markets, also agitated by the threat of supply disruptions in the Middle East and beyond.

At the United Nations, the United States blocked an Arab-backed resolution that would have demanded Israel halt its military offensive in the Gaza Strip, the first U.N. Security Council veto in nearly two years.

President Bush, speaking of the Lebanon offensive, backed Israel's right to defend itself and denounced Hezbollah as "a group of terrorists who want to stop the advance of peace."

But he also expressed worries the Israeli assault could cause the fall of Lebanon's anti-Syrian government. "We're concerned about the fragile democracy in Lebanon," Bush said in Germany.

The European Union took a harsher tone, criticizing Israel for using what it called "disproportionate" force. EU foreign policy chief Javier Solana said he was planning a peace mission.

The Arab League called an emergency meeting of foreign ministers in Cairo on Saturday, and Palestinian President Mahmoud Abbas warned that Israel's Lebanon offensive "is raising our fears of a new regional war."

Egypt launched a diplomatic bid to resolve the crisis, amid apparent frustration among moderate Arab nations that Hezbollah - and by implication its top ally Syria - had started the fight with Israel.

Saudi Arabia, the Arab world's political heavyweight and economic powerhouse, accused Hezbollah guerrillas - without naming them - of "uncalculated adventures" that precipitated the latest Middle East crisis.

"The kingdom sees that it is time for those elements to alone shoulder the full responsibility for this irresponsible behavior and that the burden of ending the crisis falls on them alone," according to a Saudi official quoted by the Saudi Press Agency.

Hezbollah's rocket attack on the port city of Haifa was its deepest such strike into northern Israel yet. No injuries were reported in Haifa, home to 270,000 residents and a major oil refinery 30 miles south of the border. Still, the Israeli ambassador to the United States, Daniel Ayalon, called the attack "a major, major escalation."

"Those who fire into such a densely populated area will pay a heavy price," said David Baker, an official in the Israeli prime minister's office.

Hezbollah's deputy leader denied its fighters fired on Haifa, but Israel blamed the group, which had warned earlier in the day it would strike the city if Beirut were targeted. Israeli officials said it was a Katyusha rocket launched from southern Lebanon. Witnesses also confirmed that a rocket hit the city.

The militants also fired rockets at four other northern Israeli towns, killing a 40-year-old woman on her balcony in Nahariya and a man in Safad.

Soon the Haifa attack, Israeli helicopter gunships raked fuel depots at Beirut's seaside airport with machine guns and missiles. The tanks exploded, sending gigantic flames into the night sky just outside Beirut. Earlier in the day, warplanes shut down the airport with strikes that pounded craters into all three of its runways, and Israeli warships sealed Lebanon's ports.

By evening, strikes in Hezbollah's stronghold in Beirut's southern neighborhoods appeared imminent. After nightfall Israeli planes dropped leaflets in south Beirut warning residents to avoid areas where Hezbollah operates.

Among the Lebanese dead were a family of 10 and another family of seven, killed when strikes hit their homes in the southern village of Dweir.

"It's a massacre," said Abu Talal, a 48-year-old resident who joined scores of Hezbollah supporters and townspeople at the funeral of Shiite cleric Sheik Adel Akkash, who was killed along with his wife and eight children, ages 3 months to 15 years.

"This is the (Israeli) arrogance. The raids aim to terrorize us, but morale is high."

The last time Israeli strikes targeted Beirut was in 2000, when warplanes hit a power station in the hills above the city after a Hezbollah attack killed Israeli soldiers. Israel has not hit Beirut's airport since its 1982 invasion of Lebanon and occupation of the capital.

Israel says it holds Lebanon responsible for Hezbollah's snatching of the two soldiers, Ehud Goldwasser, 31 and Eldad Regev, 26. The Lebanese government insisted it had no prior knowledge of the move and did not condone it - and even withdrew its ambassador to the U.S. after he made comments seemingly in support of the guerrillas.

Hezbollah fighters operate with almost total autonomy in southern Lebanon, and the government has no control over their actions. But the government has long resisted international pressure to disarm the group. Any attempt to disarm Hezbollah by force could lead to sectarian conflict.

"The decision was made to intensify Israel's operations in Lebanon," Army Radio quoted political sources as saying after Olmert met with Israeli security chiefs.

Israeli airstrikes and shelling have already killed at least 55 Lebanese civilians since the two soldiers were captured on Wednesday, while a steady barrage of Hizbollah rocket fire into northern Israel has killed two Israeli civilians and wounded 90.

Israeli aircraft struck the main highway linking Beirut with the Syrian capital, Damascus, early on Friday, a Lebanese security source said. It was not immediately clear if there were casualties.

Two Hizbollah missiles hit the Israeli port of Haifa, the country's third largest city, in a move Israel described as a "major escalation" since Haifa, home to around 250,000 people, lies more than 30 km (18 miles) from the Lebanese border.

No one was injured in the Haifa attacks. Hizbollah denied firing on Haifa. In total, Israel said Hizbollah, backed by Iran and Syria, fired more than 100 rockets at towns and villages in the north on Thursday, causing widespread panic and injuries.

The military offensive coincided with an major Israeli offensive into the Gaza Strip to retrieve a captured soldier and halt Palestinian rocket fire.

Israeli troops fired a tank shell at a vehicle in Gaza on Friday, killing a Palestinian and wounding another, Palestinian medics said.

The threat of a larger-scale Israeli ground offensive into Lebanon to prevent the rocket fire gained currency after the Haifa strikes although the military remained tight-lipped.

"All options are available," army spokesman Captain Jacob Dallal said when asked about the possibility of an offensive. "Strategically speaking, if the third largest city in Israel is under attack, it's a big thing and a response can be expected."

In Tehran, Iranian President Mahmoud Ahmadinejad warned Israel not to attack Syria, saying such action would be considered an assault on the whole Islamic world that would bring a "fierce response," state television reported.

RESTRAINT

U.S. Secretary of State Condoleeza Rice, speaking in Germany, urged Israel to exercise restraint but also demanded that Syria put pressure on Hizbollah to stop attacks on Israel.

But Israel's ambassador to the United States Daniel Ayalon told CNN Israel believed its offensive was now the right way to deal with Hizbollah.

The violence was the fiercest since 1996, when Israeli troops still occupied part of south Lebanon.

President Bush voiced concern about the fate of Lebanon's anti-Syrian government, but offered no direct criticism of the punishment Israel meted out.

"Israel has the right to defend herself," he said while on a visit to Germany.

The European Union and Russia criticized Israel's strikes in Lebanon as a dangerous escalation of the Middle East conflict.

Saudi Arabia, though, blamed "elements" inside Lebanon for the violence with Israel, in unusually frank language directed at Hizbollah and its Iranian backers.

AIR AND SEA BLOCKADE

Lebanese Information Minister Ghazi al-Aridi said that Lebanon wanted an end to "this open-ended aggression" by Israel.

In New York, the U.N. Security Council set an urgent meeting for Friday at Lebanon's request.

The United States on Thursday vetoed a council resolution put forward by Qatar on behalf of Arab states that called on Israel to immediately end its military incursion in Gaza.

The bombing of Beirut's international airport forced flights to divert to Cyprus. Later, Israeli aircraft targeted fuel tanks at the airport, setting at least one tank ablaze.

Planes dropped leaflets in a Beirut suburb, urging residents to stay away from Hizbollah offices, witnesses said, a move that raised the possibility that Hizbollah's leader, Sayyed Hassan Nasrallah, could be targeted.

Israeli naval vessels enforcing the siege turned away three ships carrying fuel to Beirut, a shipping source said.

Israel has rejected Hizbollah demands that it release Arab prisoners in exchange for the captive soldiers, named by the Israeli army as Ehud Goldwasser, 31, and Eldad Regev, 26, but says it fears the soldiers could be spirited to Iran.

Iran said Israel was "talking absurdities."

The Israeli military said Hizbollah had fired more than 130 missiles into Israel in 48 hours, killing two civilians and wounding over 100. It said Hizbollah's main security compound in southern Beirut had been among targets hit on Friday. Reuters reporters said they could see no sign of damage at the site.

Black smoke billowed from a burning fuel depot at the Jiyyeh power plant south of Beirut and from fuel tanks bombed at the capital's international airport on Thursday evening.

Israeli naval vessels sporadically shelled the coastal road near Jiyyeh, witnesses said. Air raids struck several mobile telephone relay stations in eastern Lebanon.

Israeli jets also struck a Palestinian guerrilla base in eastern Lebanon. The pro-Syrian Popular Front for the Liberation of Palestine-General Command said there were no casualties.

LEBANESE GOVERNMENT POWERLESS

Israel holds Lebanon responsible for the actions of Hizbollah, a Syrian- and Iranian-backed Islamist group which has members in parliament and in the mainly anti-Syrian cabinet.

The fragile Beirut government, too divided to disarm the Shi'ite faction that effectively controls south Lebanon, has urged the U.N. Security Council to call on Israel to halt its onslaught when the top world body meets later on Friday.

But Israeli Prime Minister Ehud Olmert and his security chiefs opted on Thursday evening to ramp up the punishment. "The decision was made to intensify Israel's operations in Lebanon," Israeli Army Radio quoted political sources as saying.

That followed two unprecedented missile strikes on the port of Haifa, blamed by Israel on Hizbollah, which denied it had fired on the city, 30 km (18 miles) from the Lebanese border.

No one was hurt in the attack.

The violence in Lebanon coincided with an Israeli incursion into the Gaza Strip launched last month to try to retrieve another captured soldier and halt Palestinian rocket fire.

The army said on Friday it had pulled out of the central Gaza Strip, which it entered as part of the offensive. It said its forces had targeted an office of the ruling Hamas militant group in the northern Gaza Strip and a bridge overnight.

Troops fired a tank shell at a vehicle, killing one Palestinian and wounding another, Palestinian medics said.

Fearing a prolonged Israeli-Hizbollah confrontation, Lebanese queued for petrol and hoarded food and drink. Power rationing began and many shops and offices stayed shut.

The crisis has helped drive world oil prices to record highs and has shaken financial markets in Israel and Lebanon.

WARNING LEAFLETS

Israeli planes dropped leaflets in Beirut suburbs and some southern cities urging residents to stay away from Hizbollah offices, witnesses said, fuelling speculation that the group's charismatic leader, Sayyed Hassan Nasrallah, could be targeted.

"Nasrallah, I think, has pronounced sentence on himself but we will settle the account with him fully somewhere, sometime," Israeli Interior Minister Ronnie Bar-On told Israel Radio.

President Bush has said Israel has the right to defend itself, but should not weaken the Lebanese government. Secretary of State Condoleezza Rice urged Israel to exercise restraint and demanded that Syria rein in Hizbollah.

Syria's ambassador to the United States said Washington should restrain Israel and push for renewed peace talks.

The European Union and Russia have criticized Israel's strikes in Lebanon as disproportionate.

Israeli Justice Minister Haim Ramon, when asked about the scale of the attacks on Lebanon, said his country was acting just as Russia did against the Chechens and the United States did against al Qaeda leader Osama bin Laden in Afghanistan.

"In the Middle East we are currently in a situation of great fragility and instability. We are in a dangerous situation, a very dangerous situation. We must be very, very careful," he said Friday.

The president welcomed the dispatch of a UN mission to the Middle East, whose aim he said should be to secure the release of the Israeli prisoners -- including one held in Gaza -- establish a ceasefire and study new security arrangements along the Israeli-Lebanese border.

At the same time, he said that Lebanon's Hezbollah and the Palestinian Hamas movement "need to stop something which is totally inadmissible, unacceptable, irresponsible -- the rocket attacks which are now regular on Israel."

"There is a kind of process engaged in by Hamas and Hezbollah based on provocation-repression .... These people are totally irresponsible," he said.

Asked if the organisations were being encouraged by
Syria and Iran, he said: "I have the feeling ... that Hamas and Hezbollah cannot have taken these initiatives on their own, and that consequently there must be somewhere support from this or that nation."

Comment: Um, so where's the soldier??

One raid struck the house of an MP for the governing Palestinian movement Hamas, whose administration has been directly targeted in the offensive, in Beit Lahiya in north Gaza, and a bridge in the central part of the territory.

At least 76 Palestinians and one Israeli soldier have now been killed since Israel stepped up a ground assault on Gaza July 5 in a bid to retrieve Shalit, snatched in a deadly raid on June 25, and stop Palestinian rocket attacks.

Three rockets fired from Gaza exploded in the southern Israeli town of Sderot on Friday but caused no damage or any casualties, the military said.

The armed wing of radical movement Islamic Jihad claimed to have fired one rocket on Sderot in response to continued Israeli "aggression".

One Palestinian was killed late Thursday when a tank fired a shell at a vehicle moving towards Israeli forces stationed in the Qarara in southern Gaza.

But tanks and armoured jeeps positioned in the centre near the Deir al-Balah refugee camp and the town of Khan Yunis withdrew from the area Friday, witnesses and the army said.

Ahmed al-Kurd, the Hamas mayor of Deir al-Balah, said at least 30 hectares of farmland and orchard, largely olive trees, were badly damaged by the Israeli troops in the town and around 20 homes partially or entirely destroyed.

"There is a lot of damage to Salaheddin street (the main road running north and south in the Gaza Strip). We are trying to repair it but that won't be easy," said Khan Yunis governor Osama Farra.

An army spokeswoman said the only place where Israeli ground forces remain in Gaza is in Dahaniya, in the south, near the former international airport that was destroyed by the army after the second Palestinian uprising erupted.

The pullback came after Israel's chief ally the United States vetoed a UN resolution urging Israel to halt military operations in Gaza, condemning the assault and calling for the immediate withdrawal of its troops.

US Ambassador John Bolton said the veto was because of the "unbalanced" nature of the draft text which he argued laid a disproportionate amount of blame on Israel for the current crisis in the region. The text had also condemned the firing of rockets from Gaza into Israel and Shalit's abduction.

What has become the worst Israeli-Palestinian crisis in months was sparked when the 19-year-old was snatched by Palestinian militants, including members of the armed wing of Hamas, on the Gaza border.

Faced with twin Israeli offensives in Gaza and Lebanon, following Wednesday's abduction of two soldiers by Hezbollah, Palestinian president Mahmud Abbas issued a stark warning against the eruption of "regional war".

Shalit's captors have, like Hezbollah, demanded the release of prisoners in exchange for their hostage.

But Israel has refused any talks with the Islamist movement that advocates the destruction of the Jewish state, or to engage in a prisoner swap, vowing the assault will continue "in places, in time, in measures" at its convenience.

Several Katyusha rockets also landed near army bases and outposts near the border with Lebanon but did not cause casualties or damage.

On Thursday, two Israeli civilians were killed and more than 50 were wounded in similar rocket attacks on the north.

Around 130 rockets have been fired from southern Lebanon in the past 48 hours, a military source said, including on the port of Haifa.

In the south, three makeshift rockets fired by Palestinian militants in the Gaza Strip landed in the southern desert town of Sderot, exploding but causing no casualties or damage, the military said.

The Al-Quds Brigades, the armed wing of militant Palestinian group Islamic Jihad, issued a statement saying it had fired one rocket at Sderot "as part of our response to the Israeli aggression".

Separately, the armed wing of the Hamas Islamist group, the Ezzedine al-Qassam Brigades, said in a statement it had fired a rocket towards the southern Israeli coastal town of Ashkelon. The attack could not be independently confirmed.

Israel launched two deadly offensives, in Lebanon and the Gaza Strip, following the capture of two soldiers by Hezbollah guerrillas Wednesday and last month's seizure of another serviceman by Palestinian militants -- among them Hamas loyalists.

At least 76 Palestinians have been killed in the Gaza offensive and at least 50 people have been killed by Israel's relentless attacks on Lebanon.

Explaining his negative vote, US Ambassador John Bolton described the text as "unbalanced" and was "not only untimely but also outmoded" because of the attacks against Israel by Lebanese Hezbollah militants and UN chief Kofi Annan's decision to send a crisis team to the region.

He said adoption of the resolution would have exacerbated tensions in the region and would have undermined "our vision of two democratic states, Israel and Palestine, living side by side in peace and security."

The United States, Israel's staunchest ally, last used its veto in the Security Council in October 2004, to block a similar draft demanding that Israel end all military operations in northern Gaza and withdraw from the area.

"We witnessed hundreds of application layer attacks against Israeli-related web sites," said Ariel Pisetsky, manager of engineering and security at NetVision, one of Israel's leading ISPs. He added that this kind of attack has become increasingly prevalent in recent years.

Local ISPs are deploying more aggressive security to deal with the threat. The latest onslaught came within hours of Wednesday morning's outbreak of hostilities. The hackers look for vulnerabilities on Israeli web sites and domains.

They search for domains ending with the suffix co.il. Typically the hacker searches for file-uploading or scripting capabilities. Once the vulnerability of these capabilities is located, files are uploaded to deface the site.

Rapid Response

NetVision and other ISPs responded within a matter of minutes. "Our immediate response was to make it far more difficult for all users to enter the web sites," noted Mr. Pisetsky.

In NetVision's case, the company immediately deployed two new security technologies that it began testing in recent weeks on a trial basis on the servers that had come under attack.

Israeli ISPs are tightlipped about the latest security software systems they are deploying to counter the sharp rise in application layer attacks, but many are being developed by local startup companies.

"This field of security is very hot and a number of local startups are focusing their attention on this space," said Dan Yachin, a Tel Aviv-based research director for emerging technologies at IDC.