NEW YORK (Reuters) - S&P 500 index futures briefly edged higher on Tuesday after data showed housing starts rose to their highest rate in more than four years in October.
S&P 500 futures were last up 0.3 point. Dow Jones industrial average futures trimmed declines but were still down 8 points, while Nasdaq 100 futures added 1.25 points.
(Reporting By Leah Schnurr; Editing by Kenneth Barry)
GAZA/JERUSALEM (Reuters) - Israel bombed dozens of targets in Gaza on Monday and said that while it was prepared to step up its offensive by sending in troops, it preferred a diplomatic solution that would end Palestinian rocket fire from the enclave.
As international pressure mounted for a truce, mediator Egypt said a deal to end the fighting could be close.
Twelve Palestinian civilians and four fighters were killed in the air strikes, bringing the Gaza death toll since fighting began on Wednesday to 90, more than half of them non-combatants, local officials said. Three Israeli civilians have been killed.
After an overnight lull, militants in the Hamas-run Gaza Strip fired 45 rockets at southern Israel, causing no casualties, police said. One damaged a school, but it was closed at the time.
The deaths of 11 Palestinian civilians - nine from one family - in an air strike on Sunday - drew more international calls for an end to six days of hostilities and could test Western support for an offensive Israel billed as self-defense after years of cross-border rocket attacks.
Israel's military did not immediately comment on a report in the liberal Haaretz newspaper that it had mistakenly fired on the Dalu family home, where the dead spanned four generations, while trying to kill a Hamas rocketry chief.
Echoes of explosions in Gaza mixed with cries of grief and defiant chants of "God is greatest" at the funeral of the four children and five women killed in the attack that flattened the three-storey house. Their bodies were wrapped in Palestinian and Hamas flags and thousands turned out to mourn them.
United Nations Secretary-General Ban Ki-moon was due to arrive in Cairo to weigh in on ceasefire efforts led by Egypt, which borders both Israel and Gaza and whose Muslim Brotherhood-rooted government has been hosting leaders of Hamas and Islamic Jihad, a smaller armed faction in the Palestinian enclave.
Israeli media said a delegation from Israel had also been to Cairo for the truce talks. A spokesman for Prime Minister Benjamin Netanyahu's government declined comment on the matter.
"Israel is prepared and has taken steps, and is ready for a ground incursion which will deal severely with the Hamas military machine," a senior official close to Netanyahu told Reuters.
But he added: "We would prefer to see a diplomatic solution that would guarantee the peace for Israel's population in the south. If that is possible, then a ground operation would no longer be required. If diplomacy fails, we may well have no alternative but to send in ground forces."
The official's language echoed that of U.S. President Barack Obama, who said on Sunday it would be "preferable" to avoid a move into Gaza. Obama also said Israel had a right to self-defense and no country would tolerate missiles raining down on its citizens.
Egyptian negotiators could be close to achieving a deal between Israel and the Palestinians to stop the fighting could be close, the Egyptian prime minister said.
"I think we are close, but the nature of this kind of negotiation, (means) it is very difficult to predict," Hisham Kandil said in an interview in Cairo for the Reuters Middle East Investment Summit.
Egypt's foreign minister is expected to visit Gaza on Tuesday with a delegation of Arab ministers to express solidarity with the Palestinians.
In scenes recalling Israel's 2008-2009 winter invasion of Gaza, tanks, artillery and infantry have massed in field encampments along the sandy, fenced-off Gaza border and military convoys moved on roads in the area.
Israel has also authorized the call-up of 75,000 military reservists, so far mobilizing around half that number.
WORLD CONCERN
The Gaza fighting has stoked the worries of world powers watching an already combustible region.
In the absence of any prospect of permanent peace between Israel and Hamas and other Islamist factions, mediated deals for each to hold fire unilaterally have been the only formula for stemming bloodshed in the past. But both sides now placed the onus on the other.
Izzat Risheq, aide to Hamas politburo chief Khaled Meshaal, wrote on Facebook that Hamas would enter a truce only after Israel "stops its aggression, ends its policy of targeted assassinations and lifts the blockade of Gaza".
Listing Israel's terms, Vice Prime Minister Moshe Yaalon wrote on Twitter: "If there is quiet in the south and no rockets and missiles are fired at Israel's citizens, nor terrorist attacks engineered from the Gaza Strip, we will not attack."
Yaalon also said Israel wanted an end to Gaza guerrilla activity in the neighboring Egyptian Sinai, a desert peninsula where lawlessness has spread during Cairo's political crises.
Israel bombed some 80 sites in Gaza overnight, the military said, adding in a statement that targets included "underground rocket launching sites, terror tunnels and training bases" as well as "buildings owned by senior terrorist operatives".
Netanyahu has said he had assured world leaders that Israel was doing its utmost to avoid causing civilian casualties in Gaza. At least 22 of the Gaza fatalities have been children, medical officials said.
Before leaving for Cairo, Ban urged Israel and the Palestinians to cooperate with all Egyptian-led efforts to reach an immediate ceasefire.
But a big rocket strike might be enough for Netanyahu to give a green light for a Gaza invasion, despite the political risks of heavy casualties before a January election he is favored to win.
Although 84 percent of Israelis supported the current Gaza assault, according to a Haaretz poll, only 30 percent wanted an invasion. Nineteen percent wanted their government to work on securing a truce soon.
Israel's declared goal is to deplete Gaza arsenals and force Hamas to stop rocket fire that has bedevilled Israeli border towns for years.
The rockets now have greater range, becoming a strategic weapon for Gaza's otherwise massively outgunned militants. Several projectiles have targeted Tel Aviv and Jerusalem. None hit the two cities and some of the rockets were shot down by Israel's Iron Dome interceptor system.
As a precaution against the rocket interceptions endangering nearby Ben-Gurion International Airport, civil aviation authorities said on Monday new flight paths were being used.
There was no indication takeoffs and landings at Ben-Gurion had been affected.
Hamas and other groups in Gaza are sworn enemies of the Jewish state which they refuse to recognize and seek to eradicate, claiming all Israeli territory as rightfully theirs.
Hamas won legislative elections in the Palestinian Territories in 2006 but a year later, after the collapse of a unity government under President Mahmoud Abbas the Islamist group seized control of Gaza in a brief and bloody civil war with forces loyal to Abbas.
By Simon Perry
11/19/2012 at 09:00 AM EST
But a close pal, comedian Alan Carr, is reporting from the frontlines of Adele's new life as a mom.
"All I'll say is I have seen Adele's baby and he's such a cutie. She's doing great, she's glowing," he tells The Sun.
"Because we're friends, people will ask me on the red carpet if she's breast feeding or using a breast pump," he continues. "Well, I think that's f––ing disgusting. This is a young girl. I'm not going to talk about her breasts."
She may be staying out of the spotlight but her latest song – "Skyfall," from the new James Bond film – has been a success on both sides of the Atlantic.
LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.
There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.
Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.
In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.
Novartis said the immunization has had side effects such as fever and redness at the injection site.
Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.
NEW YORK (Reuters) - Stock index futures started a holiday-shortened week higher on Monday, with signs of progress in Washington talks to resolve the fiscal crunch lifting investors' mood.
Leading Democratic and Republican lawmakers expressed confidence on Sunday that they could reach a deal to avert the "fiscal cliff" even as they laid down markers on raising taxes and spending cuts that may make any agreement more difficult. European stocks also reacted by rising from a 3 1/2-month low.
Democratic Senator Dick Durbin said on CNN, "What I hear is a perceptible change in rhetoric from the other side."
Also appearing on CNN, Republican Representative Tom Price said, "Every member of our caucus appreciates that this fiscal crisis, this challenge that we have, is ever closer." Opinion polls show that Republicans would shoulder more of the blame if the country goes over the fiscal cliff.
"A deal that doesn't face healthcare spending head on and also raises taxes of substance with economic growth mediocre is not a good deal. This said, the markets will celebrate any deal in the short term but will likely deal with the economic consequences in 2013," said Peter Boockvar, managing director at Miller Tabak & Co in New York.
S&P 500 futures rose 7.4 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 61 points and Nasdaq 100 futures rose 16 points.
Investors awaited data on existing-home sales for October, due at 10 a.m. (1500 GMT). Economists in a Reuters survey forecast an annualized 4.75 million units, a repeat of the September total. Investors also eyed the November NAHB housing market index, also at 10 a.m. (1500 GMT).
Shares of Lowe's Cos Inc
Networking equipment company Cisco Systems Inc
General Motors Co
Wal-Mart Stores Inc
Citigroup Inc
Online financial services company ETrade Financial Corp
Hope that U.S. politicians would find common ground to steer clear of the "fiscal cliff" boosted stocks on Friday, though the gains were not enough to offset the week's losses.
(Reporting by Angela Moon; Editing by Kenneth Barry)
GAZA/JERUSALEM (Reuters) - Israel bombed Palestinian militant targets in the Gaza Strip from air and sea for a fifth straight day on Sunday, preparing for a possible ground invasion while also spelling out its conditions for a truce.
Palestinians launched dozens of rockets into Israel and targeted its commercial capital, Tel Aviv, for a fourth day. The "Iron Dome" missile shield shot down two of the rockets fired toward Israel's biggest city but falling debris from the interception hit a car, which caught fire. Its driver was not hurt.
In scenes recalling Israel's 2008-2009 winter invasion of the Gaza Strip, tanks, artillery and infantry massed in field encampments along the sandy border. Military convoys moved on roads in the area newly closed to civilian traffic.
Prime Minister Benjamin Netanyahu said Israel was ready to widen its offensive.
"We are exacting a heavy price from Hamas and the terrorist organizations and the Israel Defence Forces are prepared for a significant expansion of the operation," Netanyahu said at a cabinet meeting, giving no further details.
Palestinian officials said 56 Palestinians, most of them civilians, including 16 children, have been killed in small, densely populated Gaza since the Israeli offensive began, with hundreds wounded. More than 500 rockets fired from Gaza have hit Israel, killing three civilians and wounding dozens.
Israel unleashed intensive air strikes on Wednesday, killing the military commander of the Islamist Hamas movement that governs Gaza and spurns peace with the Jewish state.
Israel's declared goal is to deplete Gaza arsenals and press Hamas into stopping cross-border rocket fire that has bedeviled Israeli border towns for years and is now displaying greater range, putting Tel Aviv and Jerusalem in the crosshairs.
AIR STRIKE ON MEDIA CENTRES
In air raids on Sunday, two Gaza City media buildings were hit, witnesses said. Eight journalists were wounded and facilities belonging to Hamas's Al-Aqsa TV as well as Britain's Sky News were damaged.
An employee of Beirut-based al Quds television station lost his leg in the attack, local medics said.
The Israeli military said the strike targeted a rooftop "transmission antenna used by Hamas to carry out terror activity", and that journalists in the building had effectively been used as human shields by the group.
Three other attacks killed three children and wounded 14 other people, medical officials said, with heavy detonations regularly jolting the Mediterranean coastal enclave.
Egyptian President Mohamed Mursi said in Cairo, as his security deputies sought to broker a truce with Hamas leaders, that "there are some indications that there is a possibility of a ceasefire soon, but we do not yet have firm guarantees".
Egypt has mediated previous ceasefire deals between Israel and Hamas, the latest of which unraveled with recent violence.
A Palestinian official told Reuters the truce discussions would continue in Cairo on Sunday, saying "there is hope", but that it was too early to say whether the efforts would succeed.
U.N. Secretary-General Ban Ki-moon will be in Egypt on Monday for talks with Mursi, the foreign ministry in Cairo said. U.N. diplomats earlier said Ban was expected in Israel and Egypt this week to push for an end to the fighting.
Asked on Israel Radio about progress in the Cairo talks, Silvan Shalom, one of Netanyahu's deputies, said: "There are contacts, but they are currently far from being concluded."
Listing Israel's terms for ceasing fire, Moshe Yaalon, another deputy to the prime minister, wrote on Twitter: "If there is quiet in the south and no rockets and missiles are fired at Israel's citizens, nor terrorist attacks engineered from the Gaza Strip, we will not attack."
SYRIAN FRONT
Israel's military also saw action along the northern frontier, firing into Syria on Saturday in what it said was a response to shooting aimed at its troops in the occupied Golan Heights. Israel's chief military spokesman, citing Arab media, said it appeared Syrian soldiers were killed in the incident.
There were no reported casualties on the Israeli side from the shootings, the third case this month of violence that has been seen as a spillover of battles between Syrian President Bashar al-Assad's forces and rebels trying to overthrow him.
Israel's operation in the Gaza Strip has so far drawn Western support for what U.S. and European leaders have called its right to self-defense, but there was also a growing number of appeals from them to seek an end to the hostilities.
British Foreign Minister William Hague said on Sky News that he and Prime Minister David Cameron "stressed to our Israeli counterparts that a ground invasion of Gaza would lose Israel a lot of the international support and sympathy that they have in this situation".
Israel's cabinet decided on Friday to double the current reserve troop quota set for the Gaza campaign to 75,000. Some 31,000 soldiers have already been called up, the military said.
Netanyahu, in his comments at Sunday's cabinet session, said he had emphasized in telephone conversations with world leaders "the effort Israel is making to avoid harming civilians, while Hamas and the terrorist organizations are making every effort to hit civilian targets in Israel".
Israel withdrew settlers from Gaza in 2005 and two years later Hamas took control of the slender, impoverished territory, which the Israelis have kept under blockade.
NETANYAHU IN RE-ELECTION BID
Ben Rhodes, a deputy national security adviser to President Barack Obama, said the United States would like to see the conflict resolved through "de-escalation" and diplomacy, but also believed Israel had the right to self-defense.
A possible sweep into the Gaza Strip and the risk of major casualties it brings would be a significant gamble for Netanyahu, favored to win a January election.
The last Gaza war, a three-week Israeli blitz and invasion four years ago, killed 1,400 Palestinians, mostly civilians. Thirteen Israelis died in the conflict.
The current flare-up around Gaza has fanned the fires of a Middle East ignited by a series of Arab uprisings and a civil war in Syria that threatens to spread beyond its borders.
One significant change has been the election of an Islamist government in Cairo that is allied with Hamas, which may narrow Israel's maneuvering room in confronting the Palestinian group. Israel and Egypt made peace in 1979.
On Saturday, Israeli aircraft bombed Hamas government buildings in Gaza, including the offices of Prime Minister Ismail Haniyeh and a police headquarters.
Israel's Iron Dome missile interceptor system has destroyed more than 200 incoming rockets from Gaza in mid-air since Wednesday, saving Israeli towns and cities from potentially significant damage.
However, one rocket salvo unleashed on Sunday evaded Iron Dome and wounded two people when it hit a house in the coastal city of Ashkelon, police said.
(Additional reporting by Maayan Lubell in Jerusalem and London bureau, Writing by Jeffrey Heller)
By Patrick Gomez
11/17/2012 at 10:40 PM EST
Taylor Swift and Harry Styles
Janet Mayer/Splash News Online; Don Arnold/Wireimage
The "Never Ever Getting Back Together" singer is seemingly taking her lyrics to heart as she moves on from recent ex, Conor Kennedy, and enjoys the company of One Direction hottie Harry Styles.
"I had to literally do a double-take," an onlooker tells PEOPLE of finding Styles, 18, with Swift, 22, on the set of The X Factor Thursday morning.
Styles was on hand to watch Swift rehearse the debut of "State of Grace," which she performed later that night on the Fox reality show.
"He was smiling at her while she rehearsed. When she was done he jumped up on stage, picked her up, put her over his shoulder and carried her off stage," the onlooker says. "The whole crew was really surprised."
The young singers were also spotted by X Factor host Mario Lopez, who says he was slapped on the back by Styles during Swift's rehearsal.
"I said, 'What are you doing here,' " Lopez said on his 104.3 MY FM radio show Friday. "And he sort of [pointed] toward Taylor."
Lopez went on to say he later saw the two "hand-in-hand."
A telling sign of the budding relationship may have been a look Styles shared with his bandmate Niall Horan a week earlier after Horan told PEOPLE his favorite song of 2012 was Swift's "Never Ever Getting Back Together."
When asked if he would ever date Swift, Horan gave a small laugh, looked at Styles and answered with a succinct, "no."
LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.
There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.
Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.
In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.
Novartis said the immunization has had side effects such as fever and redness at the injection site.
Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.
NEW YORK (Reuters) - The 1987 crash. The Y2K bug. The debt ceiling debacle of 2011.
All these events, in the end, turned out to be buying opportunities for stocks. So will the "fiscal cliff," some investors say as they watch favorite stocks tumble during the political give-and-take happening in Washington.
The first round of talks aimed at avoiding the "fiscal cliff" caused a temporary rise in equities on Friday, signaling Wall Street's recent declines could be a buying opportunity. The gains were small and sentiment remains weak, but it suggests hope for market bulls.
Though shares ended moderately higher on Friday, it was not enough to offset losses for the week. The S&P was down 1.5 percent, while both the Dow and the Nasdaq fell 1.8 percent.
The S&P 500 is down more than 5 percent in the seven sessions that followed President Barack Obama's re-election. Uncertainty arose as attention turned to Washington's task of dealing with mandated tax hikes and spending cuts that could take the U.S. economy back into recession.
Some see the market's move as an overreaction to hyperbolic headlines about policy gridlock in Washington, believing stocks may start to rebound in what should be a quiet few days ahead of the Thanksgiving holiday next Thursday.
"It just doesn't seem to make any sense that you suddenly wake up the day after the election and realize we've got a fiscal cliff," said Krishna Kumar, partner at New York hedge fund Goose Hollow Alpha Advisors.
Not long ago the S&P was on target for its second-best year in the last 10, riding a 17 percent advance in 2012. That's been halved to about 8 percent, which isn't bad but disappointing compared with just a month ago.
Investors have been selling the year's winners. Apple is down 25 percent from its peak above $700. General Electric
"I think it's a good opportunity to be long stocks at these levels," said Kumar.
Hikes on capital gains and dividend taxes are on the line, and Obama has dug in his heels on what he sees as a mandate to make the tax code more progressive.
He seems to have the upper hand in dealings with Congress because Republican lawmakers don't want to see tax rates increase, which is what will happen if no solution is found by the beginning of 2013. Republicans don't want to take the blame for driving the economy over the cliff.
The current crisis is similar to last year's fight to raise the U.S. debt ceiling, which led to the downgrade of the United States' top credit rating in early August 2011.
During the dealings, the S&P 500 lost 18.8 percent between its peak in July 2011 and its bottom in August. As the market slid, the political standoff badly hurt investors' confidence in Washington, setting off a spike in volatility.
In the end a deal was announced that raised the ceiling and put off longer-term fiscal decisions until January 1, 2013, setting the stage for today's "fiscal cliff" crisis.
After staying flat through September 2011, the S&P 500 jumped 31 percent between its October low and the end of March.
BUY THE DIP?
Gridlock in Washington and all that could possibly go wrong with the economy if a deal is not reached have grabbed the headlines, but the negotiations leave room for stock market gains. Congressional leaders said Friday they will work through the Thanksgiving holiday recess to find a solution.
"The debate over how to solve (the fiscal cliff) may be more productive than is commonly recognized," said Brad Lipsig, senior portfolio manager at UBS Financial Services in New York.
"The U.S. is facing a major debt overhang, and serious steps toward addressing it might ultimately be viewed as a positive for future growth," he said. "The market may recognize this and, after a time of hand wringing, recover from the concerns with a renewed sense of optimism."
The recent selling took the S&P 500's relative strength index - a technical measure of internal strength - below 30 this week, indicating the benchmark is oversold and due for a rebound.
The RSI in four of the 10 S&P sectors - utilities, telecoms, consumer staples and technology - is below 30 and the highest RSI reading, for the consumer discretionary sector, is below 40, suggesting a bounce is in store.
"What I want to do is what we did during the decline following the budget negotiations in the summer of 2011: The lower the stock market goes, the more I want to own stock," said Brian Reynolds, chief market strategist at New York-based Rosenblatt Securities.
"If we go off the cliff it will be with a bungee cord attached," he said.
KEEP CALM AND HEDGE
Volatility is expected to rise through the end of November and to spike in late December if no agreement on the fiscal cliff is reached in Congress. Alongside comes opportunity for those with high risk tolerance.
"Recently, volatility has increased in the market overall. You can't really pick it up in the VIX yet, but I think as we get through November, I think you're likely to see the VIX be at a relatively higher level," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
In 2011, the VIX averaged 19.2 in July and 35 in August. So far this month the average is 17.8 and it is expected to spike if negotiations on the cliff drag into late next month.
"Looking at the range of possibilities, I would say any of them would be better than sitting here waiting. I would even put going off the fiscal cliff in that category," said Jill Cuniff, president of Seattle-based Edge Asset Management Inc, which manages about $20 billion.
"But we don't believe Congress will let that happen; there's going to be some middle ground here."
(Reporting by Rodrigo Campos and Jonathan Spincer, additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)
GAZA/JERUSALEM (Reuters) - Israeli aircraft bombed Hamas government buildings in Gaza on Saturday, including the prime minister's office, after Israel's cabinet authorized the mobilization of up to 75,000 reservists, preparing for a possible ground invasion.
Israeli planes shattered the office building of Prime Minister Ismail Haniyeh - where he had met on Friday with the Egyptian prime minister - and struck the Interior Ministry.
Loud explosions regularly rocked the densely populated Palestinian territory, sending plumes of smoke billowing into the sky. The occasional hiss of outgoing rocket fire showed Islamist militants were pursuing their defiance of the assault.
Despite the violence, Tunisia's foreign minister arrived in the coastal enclave on Saturday in a show of solidarity, denouncing the Israeli attacks as illegitimate and unacceptable.
Officials in Gaza said 41 Palestinians, among them 20 civilians including eight children and a pregnant woman, had been killed in Gaza since Israel began operations four days ago. Three Israeli civilians were killed by a rocket on Thursday.
Israel's military said its air force had hit at least 180 targets since midnight, including a police headquarters, government buildings, rocket launching squads and a Hamas training facility in the impoverished territory.
A three-storey house belonging to Hamas official Abu Hassan Salah was also hit and completely destroyed early on Saturday. Rescuers said at least 30 people were pulled from the rubble.
"What Israel is doing is not legitimate and is not acceptable at all," Tunisian Foreign Minister Rafik Abdesslem said as he visited Haniyeh's wrecked headquarters. "It does not have total immunity and is not above international law."
Israel launched a massive air campaign on Wednesday with the declared aim of deterring Hamas from launching cross-border rocket salvoes that have plagued southern Israel for years.
The Palestinians have fired hundreds of rockets out of Gaza, including one at Jerusalem and three at Tel Aviv - Israel's commercial centre. Jerusalem had not been targeted in such a way since 1970, and Tel Aviv since 1991.
Although there were no reports of casualties or damage in either city, the long-range attacks came as a shock and advanced the prospect of an Israeli ground invasion into Gaza
"This will last as long as is needed; we have not limited ourselves in means or in time," Foreign Minister Avigdor Lieberman told Israel's Channel One television on Saturday.
Hamas says it is committed to continued confrontation with Israel and is eager not to seem any less resolute than smaller, more radical groups that have emerged in Gaza in recent years.
The Islamist Hamas has ruled Gaza since 2007. Israel pulled settlers out of Gaza in 2005 but has maintained a blockade of the territory.
EGYPTIAN PEACE EFFORTS
Prime Minister Benjamin Netanyahu held a four-hour strategy session late on Friday with a clutch of senior ministers on widening the military campaign, while other cabinet members were polled by telephone on increasing mobilization.
Political sources said they decided to more than double the current reserve troop quota set for the Gaza offensive to 75,000. It did not necessarily mean all would be called up.
Three soldiers were lightly hurt by fire from the Gaza Strip on Saturday, the army said.
Egyptian Prime Minister Hisham Kandil paid a high-profile visit to Gaza on Friday, denouncing what he described as Israeli aggression and saying Cairo was prepared to mediate a ceasefire.
Egypt's Islamist government, which took power after free elections following an uprising that ousted veteran autocrat Hosni Mubarak, is allied with Hamas but also party to a 1979 peace treaty with Israel.
"Egypt will spare no effort ... to stop the aggression and to achieve a truce," Kandil said.
A Palestinian official with knowledge of Cairo's mediation efforts said on Saturday that Egypt was pursuing a truce.
"Egyptian mediators are continuing their mediation efforts and these will intensify in the coming hours," he told Reuters.
In a further sign Netanyahu might be clearing the way for a ground operation, Israel's armed forces decreed a highway leading to the territory and two roads bordering the enclave of 1.7 million Palestinians off-limits to civilian traffic.
Tanks and self-propelled guns were seen near the sandy border zone on Saturday, and around 16,000 reservists have already been called to active duty.
The Israeli military said some 367 rockets fired from Gaza had hit Israel since Wednesday and at least 222 more were intercepted by its Iron Dome anti-missile system.
Four Iron Domes were deployed initially and a fifth was rushed into action on Saturday, weeks ahead of schedule. The army said it was placed in the Tel Aviv area, showing Israel's concern for the safety of its heavily populated coastline.
Netanyahu is favored to win a January election, but further rocket strikes against Tel Aviv, a free-wheeling city Israelis equate with New York, and Jerusalem, which Israel regards as its capital, could be political poison for the conservative leader.
OBAMA REGRET
U.S. President Barack Obama commended Egypt's efforts to help calm the Gaza violence in a call to Egyptian President Mohamed Mursi on Friday, the White House said, and underscored his hope of restoring stability.
In a call with Netanyahu, Obama discussed options for "de-escalating" the situation, the White House added.
Obama "reiterated U.S. support for Israel's right to defend itself, and expressed regret over the loss of Israeli and Palestinian civilian lives," a statement on the call said.
Israel Radio's military affairs correspondent said the army's Homefront Command had told municipal officials to make civil defense preparations for the possibility that fighting could drag on for seven weeks. An Israeli military spokeswoman declined to comment on the report.
The Gaza conflagration has stirred the pot of a Middle East already boiling from two years of Arab revolutions and a civil war in Syria that threatens to spread across borders.
"Israel should understand that many things have changed and that lots of water has run in the Arab river," Tunisia's Abdesslem told reporters in Gaza.
It is the stiffest challenge yet for Mursi, a veteran politician from the Muslim Brotherhood who was elected this year after protests ended Mubarak's 30-year rule in 2011.
Egypt's Muslim Brotherhood are spiritual mentors of Hamas, yet Mursi has also pledged to respect Cairo's peace accord with Israel, which is seen in the West as the foundation of regional security. Egypt and Israel both receive billions of dollars in U.S. military aid to underwrite their treaty.
Hamas fighters are no match for the Israeli military. The last Gaza war, involving a three-week long Israeli air blitz and ground invasion over the New Year period of 2008-2009, killed more than 1,400 Palestinians, mostly civilians. Thirteen Israelis died.
U.N. Secretary-General Ban Ki-moon is expected to visit Israel and Egypt next week to push for an end to the fighting in Gaza, U.N. diplomats said on Friday.
Hamas refuses to recognize Israel's right to exist. By contrast, Palestinian President Mahmoud Abbas, who rules in the nearby West Bank, does recognize Israel, but peace talks between the two sides have been frozen since 2010.
Abbas' supporters say they will push ahead with a plan to have Palestine declared an "observer state" rather than a mere "entity", at the United Nations later this month.
(Additional reporting by Maayan Lubell and Ori Lewis in Jerusalem; Writing by Crispian Balmer and Jeffrey Heller; Editing by)
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