Israeli troops and Hamas militants are fighting major battles on the streets of Gaza City

Large explosions and heavy exchanges of fire hit the Shejaiya neighbourhood in the east of the city as Israel pressed forward in its campaign to halt Hamas rocket attacks.

Flares and assault helicopters were seen in the skies above the blacked-out area, where Hamas said it had fired missiles at seven Israeli tanks.

The Islamic Jihad movement said several of its members were killed in the fighting.

Israeli military sources confirmed that troops were involved in heavy clashes in the area.

French President Nicolas Sarkozy said he would tell Israel that "the violence must halt", while Palestinian President Mahmoud Abbas called for an "unconditional" truce.

Mr Sarkozy strongly criticised Hamas, the Islamist movement which rules the Gaza Strip, saying it had acted in an "irresponsible and unforgiveable" way.

"We, Europe want a ceasefire as soon as possible," he said.

"Time is working against peace. The weapons must be silenced and there must be a temporary humanitarian truce."

He met Mr Abbas in the West Bank political capital of Ramallah before going on to meet the Israeli leaders in Jerusalem.

Former British Prime Minister Tony Blair, envoy for the Quartet group of powers, said a ceasefire was a priority.

But outgoing US President George W Bush said any truce must include provisions that prevent Hamas firing rockets into Israel.

A Hamas source said there could be no ceasefire talks until Israeli forces completely withdrew from Gaza.

At least 541 people have died in Gaza since the 10-day offensive was launched by Israel in retaliation for Hamas rocket attacks on its south.

Palestinian medical officials said that 13 members of a Palestinian family had died in an Israeli strike on their home in a Gaza refugee camp on Monday.

The Israeli army said "many dozens" of Hamas fighters had been killed since ground troops invaded on Saturday.

"Hamas has so far sustained a very heavy blow from us, but we have yet to achieve our objective and therefore the operation continues," Israeli Defence Minister Ehud Barak said. source>>>

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