Monday night's attack in which an Israeli plane fired a missile into a crowded neighbourhood in Gaza City, killing the commander of the military wing of Hamas and 14 other Palestinians, was criticised by the US yesterday as "heavy handed".
The attack, in which nine children died and 145 civilians were injured, flattened the home of militant leader Salah Shehada. It drew vows of revenge from Hamas, dealing a new blow to hopes of reviving peacemaking.
Gaza City rang out with bursts of automatic machine-gun fire at a funeral attended by about 300,000 people, at which a man held aloft the tiny body of a two-month-old baby wrapped in a flag as masked men chanted, "Death to Israel! Death to America!"
Israel called the attack an unavoidable step to protect its people from suicide bombers. But UN Secretary-General Kofi Annan condemned it for exacting high casualties among civilians.
Residents said there had been no warning, not even the sound of a plane, before the missile attack, which left the neighbourhood a picture of devastation.
Israel described the attack as one of its most significant blows against Palestinian militants waging an uprising for an independent state in the Gaza Strip and West Bank, while expressing regret for the loss of civilian life.
But Hamas's vows of revenge raised the possibility of another upsurge of violence, endangering a fragile new dialogue between Israel and Palestinian moderates.
Abdel Aziz al-Rantissi, a senior Hamas official, said: "Hamas's retaliation will come very soon, and there won't be only just one (attack) . . . After this crime, even Israelis in their homes will be the target of our operations."