By Nidal al-Mughrabi and Dan Williams
GAZA/JERUSALEM (Reuters) - Israel said it was poised to escalate attacks on the Gaza Strip on Sunday following a surge of rocket and mortar salvoes by Hamas and other Palestinian factions.
A missile strike wounded four Israeli troops on jeep patrol along the Gaza boundary on Saturday, triggering army shelling that killed four Palestinian civilians and, in turn, dozens of short-range rocket launches out of Gaza that paralyzed Israel's southern border towns.
Two Gaza militants died in the ensuing Israeli air strikes. Two workers were wounded later when a plastics factory in northern Gaza Strip caught fire after it was hit by an Israeli tank shell, emergency workers said.
Israel's Iron Dome defense system knocked out a longer-range "Grad" rocket that was aimed at the southern city of Beersheba, the army said.
Thousands of Palestinians marching in the funerals of six people killed in the past 24 hours cried: "Revenge, revenge". One man said an Israeli tank fired at children then fired on adults who rushed to the scene.
The Israeli military said the tank had shot back at the spot where shortly before militants had fired an anti-tank missile at the army patrol. "It is very unfortunate that these terrorists use their own people as human shields," said Major Arye Shalicar, a spokesman for the Israeli Defense Forces (IDF).
Israel went to war against Hamas in the winter of 2008-2009 but has shown little appetite for a new round that could strain fraught relations with the new Islamist-rooted government in neighboring Egypt, which made peace with Israel in 1979.
But conservative Prime Minister Benjamin Netanyahu may be reluctant to seem weak ahead of a January 22 general election that opinion polls currently predict he will win.
"The world needs to understand that Israel will not sit with arms crossed when faced by attempts to hurt us. And we are prepared to harshen the response," Netanyahu told his cabinet in remarks aired by Israeli broadcasters.
After not openly taking part in Saturday's fighting, which included the firing of dozens of Palestinian short-range rockets and mortar bombs, Hamas issued a joint statement with five other factions claiming responsibility for Sunday's fresh salvoes.
ON THE FENCE
Though hostile to the Jewish state, Islamist Hamas has in the past avoided clashes as it consolidates its Gaza rule and convince Egypt's new rulers it can be a stabilizing force.
Israeli officials have at times noted Hamas's efforts to impose calm in Gaza, which it has governed since 2007, and maintain a policy of holding it solely responsible for any violence from the coastal territory, whoever is firing.
Four Israelis were wounded by rockets on Sunday, a military spokeswoman said. Southern Israeli municipalities ordered residents to shelters and shuttered some schools.
Islamic Jihad, a smaller faction than Hamas which often operates independently, said one rocket crewman was killed by an Israeli air strike on Sunday, after another member was killed on Saturday while photographing the fighting.
Defence Minister Ehud Barak, a centrist in Israel's coalition government, played down speculation that the upcoming election was affecting Gaza policy.
"I don't think the election should be a consideration in how we respond. It is not meant to make us avoid action ... nor is it meant to provoke us into grabbing some kind of opportunity for an operation," Barak told Israel's Army Radio.
The 2008-2009 Gaza coincided with an election campaign and some Israeli analysts see the same dynamics building.
Barak described Saturday's jeep ambush as part of a Palestinian strategy of raising the cost of Israel's countermeasures against cross-border infiltration. Israeli forces often mount hunts for tunnels and landmines on the inside of the Gaza boundary, creating a no-go zone for Palestinians.
"Of course we don't accept their attempt to change the rules," Barak said. "The essence of the struggle is over the fence. We intend to enable the IDF to work not just on our side but on the other side as well."
Palestinians said four of Saturday's dead were civilians hit by a tank shell while paying respects at a mourning tent in Gaza's Shijaia neighborhood. Israel denies targeting civilians.
(Writing by Dan Williams; Editing by Crispian Balmer, Douglas Hamilton and Jason Webb)