Palestinian militants hit Israeli city with rocket for first time

~ The rocket displayed a longer range than previous missiles.

GAZA CITY, Gaza Strip -- Palestinian militants hit an Israeli city with a rocket from Gaza for the first time Tuesday, causing no casualties but drawing a pledge of harsh retaliation from Israel while it was already in the midst of a military offensive.

Prime Minister Ehud Olmert called the rocket fire on the coastal city of Ashkelon a "major escalation," coming just hours after a deadline set by the militants holding an Israeli soldier passed with Israel rejecting demands to release about 1,500 Palestinian prisoners. The militants said they would not harm 19-year-old Cpl. Gilad Shalit -- if he is still alive. But they warned they would provide no further information about him, leaving his condition unclear.

Late Tuesday, Israeli aircraft struck the Palestinian Interior Ministry in Gaza for the second time in a week, the military said. Witnesses said missiles hit the main structure again and damaged a building next to the ministry, which has been used since the first attack..

In other attacks late Tuesday, Israeli aircraft fired missiles at a Hamas camp in southern Gaza and a Hamas-affiliated school in Gaza City. No one was hurt.

No one hurt

The rocket flew 7 miles through the air and exploded in the courtyard of a school in Ashkelon, a city of 110,000 on Israel's coast north of Gaza. The school was empty and no one was hurt. School security cameras showed a large cloud of white dust rising from the point of impact.

Though militants have fired many of the small, homemade rockets in the direction of Ashkelon, this was the first one to hit the heart of the city, displaying a longer range than most previous ones and bringing the threat of rocket barrages to a major Israeli population center for the first time.

In the hours before the rocket attack, Israeli forces were already operating in northern Gaza looking for tunnels, explosives, weapons warehouses and other facilities used by militants, the area army commander said.

However, the troops stayed outside of Palestinian towns, as they have since Israel started its offensive in Gaza a week ago. Olmert indicated that might change in response to the rocket attack on Ashkelon.

"For this attempt that was meant to harm Israeli civilians who live in the sovereign borders of Israel, there will be far-reaching consequences," Olmert warned at a U.S. Independence Day celebration at the home of Richard Jones, the U.S. ambassador to Israel. "The Hamas organization will be the first to feel this."

Earlier Tuesday before the attack on Ashkelon, Olmert made a quick visit to Sderot, the Israeli town just outside Gaza that has been the main target of the Palestinian rocket squads. He pledged to work to stop the barrages.

Olmert and Defense Minister Amir Peretz decided Tuesday to gradually step up the operation in northern Gaza, defense officials said.

Though thousands of troops took up positions in southern Gaza last week, a large-scale raid into the north would likely spark intense, bloody fighting.

Israel launched the Gaza offensive, punctuated by nightly airstrikes, to put pressure on Shalit's kidnappers -- Hamas-affiliated militants who seized the soldier in a June 25 cross-border raid. But the militants responded with defiant demands for the release about 1,500 prisoners from Israeli jails.

On Monday, the Hamas-affiliated militants set a 6 a.m. Tuesday deadline for Israel to begin complying and implied they would kill Shalit if it refused. But the deadline passed without event and a spokesman for the Army of Islam, one of the three groups that kidnapped Shalit, said the militants "decided to freeze all contacts and close the case on this soldier."

"We will not give any information that will give the occupation good news or reassurance," said the spokesman, Abu Muthana. But, he added, "We will not kill the soldier, if he is still alive."

Hours after the deadline passed, Olmert was defiant.

"We won't negotiate with terror elements and we won't let anyone believe that kidnapping is a tool to bring Israel to its knees," he said.

Olmert said he ordered the army to push forward with efforts "to strike terrorists and those who sent them and those who sponsor them. ... None of them will be immune."

The threat was clearly meant for Syria, where Israeli warplanes buzzed President Bashar Assad's summer residence last week. Israel holds Syria responsible for Shalit's abduction because it hosts Hamas' top leader, Khaled Mashaal. Israel says Mashaal ordered the kidnapping.

Despite the tough public line, Israeli officials have privately said they would consider other options to get the soldier back. Israel has released prisoners before in lopsided exchanges for captured citizens or the bodies of soldiers killed in battle.

In Gaza City, Palestinian Prime Minister Ismail Haniyeh, a top Hamas official who denies any contact with the militants holding Shalit, publicly called on them to protect the soldier and expressed hope for a peaceful resolution.

"The government is exerting efforts with Palestinian, Arab and regional parties to end this case in the appropriate manner," Haniyeh said at the opening of a Cabinet meeting.

Egypt has been leading international mediation efforts to resolve the crisis, including trying to enlist Syria to pressure Hamas. The efforts were complicated by confusion over who had the authority to make a decision over Shalit's fate.

Hamas lawmaker Salah Bardawil said Hamas temporarily cut off talks with the Egyptians.

"It's unreasonable to keep negotiating when there are no offers," he said. "If there was a feeling there was an Israeli offer ... I think we could reopen the door."

Also Tuesday, Israel opened Gaza's key cargo crossings for the second time since Sunday to allow food, fuel and other supplies into the area.

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Associated Press reporter Sarah El Deeb contributed to this report.