By Nidal al-Mughrabi
GAZA (Reuters) - Israeli soldiers and Palestinian militants battled in Gaza on Sunday after Israeli troops and tanks invaded the coastal enclave in the most serious fighting in the conflict in decades.
More than 30 Palestinians, most of them civilians, were killed as Israeli shells slammed into houses and Gaza's main shopping district, witnesses and Palestinian medical sources said. Thirty Israeli soldiers have been wounded, Israel said.
The Saturday night invasion of Hamas-ruled Gaza followed a week of Israeli bombardments from land, sea and air which failed to halt militant Hamas rocket attacks on southern Israel.
The offensive's stated aim is to destroy the militants' rocket-launching infrastructure. But about 25 rockets were fired at Israel on Sunday, one hitting a house in Sderot and wounding a woman, the Israeli army said.
More than 500 Palestinians have been killed in the nine days of "Operation Cast Lead" and Israeli officials said the offensive could last many days. Four Israelis have been killed by the Hamas rocket strikes in the same time.
"The government did everything before deciding to launch the operation. This is an unavoidable operation," Israeli Prime Minister Ehud Olmert said.
Calls for a cease-fire from the United States, Israel's staunch backer, other foreign governments and the United Nations failed to gain traction over disagreements about its terms.
TERRITORY CUT IN HALF
Israeli tanks and troops virtually cut Gaza in half in a night-time advance on Saturday, and on Sunday were ringing Gaza City itself, Palestinian witnesses said.
Israeli firepower killed 32 Palestinians, five of them fighters and the rest civilians, as fighting intensified in the territory crammed with 1.5 million people, hospital staff said.
Tank shells killed at least five civilians and wounded 40 when they slammed into Gaza City's main shopping area.
A foreign Red Crescent doctor in a northern Gaza hospital described the situation as a nightmare.
"Civilians are being killed...shells are severing people's legs, shrapnel is going into people's bodies and into people's homes, a lot of people are being cut down. Everyone is terrified," she said.
Soldiers and Hamas fighters clashed east of the Hamas stronghold of Zeitoun, witnesses said.
"I would say that most of the resistances that we faced were from mortar shells and other things but not from serious Hamas fighters face-to-face," a senior Israeli officer told reporters.
Israeli aircraft struck dozens of targets, including arms smuggling tunnels, weapons depots and mortar squads. Dozens of Hamas fighters were hit, the Israeli military said.
Heavy civilian casualties are likely to increase international pressure on Israel to halt its biggest operation in the Gaza Strip in four decades.
But the fighting also holds significant political risks for Israeli leaders before a February 10 national election, especially if its forces take heavy casualties in street fighting.
Israeli Defence Minister Ehud Barak said the ground push was to protect southern Israel from Hamas rocket attacks.
"It won't be easy. It won't be short," said Barak, leader of the centre-left Labour party and a candidate for prime minister in the election.
A spokesman for Hamas's armed wing, the Izz el-Deen al-Qassam Brigades, said Israeli troops faced death or capture.
"The Zionist enemy must know his battle in Gaza is a losing one," spokesman Abu Ubaida said.
Hamas said it had captured two Israeli soldiers but the Israeli army denied that.
The plight of Palestinian civilians was growing more desperate. People have taken shelter in their homes for days and humanitarian agencies warned that water, food and medical supplies were running short.
A spokesman for Palestinian President Mahmoud Abbas condemned the Israeli attack as "a vicious aggression."
In New York, the U.N. Security Council met but diplomats said Washington's refusal to back a Libyan-drafted demand for an immediate truce had killed the initiative.
The United States said a cease-fire should take place as soon as possible but must guarantee an end to Hamas rocket strikes.
Former British Prime Minister Tony Blair, envoy for powers sponsoring Middle East peace talks, was to meet Barak on Sunday.
France, whose President Nicolas Sarkozy is due in Jerusalem on Monday, condemned the Israeli invasion and Hamas rocket fire.
U.N. Secretary-General Ban Ki-moon called for an immediate end to the ground operation. In a telephone conversation with Prime Minister Olmert, Ban conveyed his "extreme concerns and disappointment," a U.N. statement said.
Egypt also called for an end to Israel's "savage aggression" against Gaza.
Hamas called off a six-month truce with Israel last month and stepped up its rocket attacks, complaining at Israeli raids into Gaza and a continuing blockade of the enclave.
Israel occupied Gaza in the 1967 Middle East War and formally ended its military rule in 2005 after a series of Palestinian uprisings, but it still controls the borders.
International peace efforts aimed at creating an independent Palestinian state foundered after Hamas won elections in 2006 and drove Fatah forces loyal to Abbas from Gaza a year later.