From Reuters, Nov. 20:

GAZA - Israel's air force cancelled a planned raid on the home of a Gaza militant on Sunday after hundreds of Palestinians barricaded themselves inside the building, an Israeli military spokesman and witnesses said.

Hours after the "human shield" protest, an Israeli aircraft attacked a car carrying Hamas militants on a crowded Gaza City street. Hospital officials said an elderly passerby died of his wounds after being hit in the strike.

Medical workers said the two men in the vehicle and two other passersby were wounded.

Israeli Defence Minister Amir Peretz spoke on Sunday with Palestinian President Mahmoud Abbas by phone and urged him to take steps to stop militants firing rockets into Israel, a Defence Ministry spokeswoman said.

"The defence minister told (Abbas) Israel will not tolerate continued rocket fire," she said, adding they would speak again.

A senior Palestinian official said Abbas had called for a "mutual ceasefire" in Gaza and the West Bank. Peretz, the official said, told Abbas: "There will be no ceasefire as long as rockets fall on our cities and towns."

Peretz and Abbas last spoke in October.

Israel has stepped up attacks in northern Gaza since a Palestinian rocket strike killed an Israeli woman and seriously wounded a man in the Israeli town of Sderot on Friday.

Israel had issued a warning to the family of a militant of the Popular Resistance Committees (PRC) in Jabalya refugee camp to evacuate their home because it would be bombed, the spokesman and Palestinian witnesses said.

The PRC is one of several militant groups behind daily rocket attacks from Gaza against southern Israel.

Hundreds of neighbours and protesters gathered at the site, many barricading themselves inside the house, witnesses said.

"Death to America and death to Israel," the crowd chanted.

An Israeli military spokesman confirmed the raid had been called off because of the gathering.

"We differentiate between innocent people and terrorists," the spokesman said, vowing Israel would continue its strikes against militants and accusing gunmen of using civilians in Jabalya as human shields.

Unity government

Prime Minister Ismail Haniyeh of Hamas visited Jabalya and called the protest a message to the U.N. Security Council, where the United States on Nov. 12 vetoed a resolution condemning Israeli military actions in Gaza.

Turning to the formation of a unity government, he said Hamas's participation hinged on securing guarantees that Western economic sanctions would end once a new administration of technocrats was in place.

Addressing his cabinet in Jerusalem, Israeli Prime Minister Ehud Olmert described such a government of non-political professionals as "make-believe", a senior Israeli official said.

"It is a political agreement between Hamas and Fatah that serves their interests," Olmert said, according to the official.

Palestinians hope a unity government that Hamas and Abbas's Fatah faction have been trying to form can lead to a resumption of the direct financial aid Western nations suspended after the Islamist group came to power in March.

But Hamas, which is dedicated to Israel's destruction and says it has a legitimate right to fight occupation, has rejected Western demands to renounce violence, recognise the Jewish state and accept existing interim peace deals.

Israel has been under pressure to avoid civilian casualties after an artillery shell killed 19 people, all non-combatants, in Gaza on Nov. 8. Israel apologised for the civilian deaths and said a technical fault caused a targeting error.

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