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Israel killed 11 Palestinians, including two children, and wounded 30 in a missile strike Tuesday on a van carrying militants and rockets in Gaza, the deadliest such attack in nearly four years.

The air strike signalled Israel would not flinch from targeting rocket squads in densely populated areas despite the outcry over the deaths of seven Palestinian civilians on a Gaza beach on Friday in a blast militants blamed on Israeli shelling.

"We have been showing restraint due to the international storm caused by the incident on the Gaza beach but no longer," Israeli Defence Minister Amir Peretz was quoted by the YNet news website as telling reporters in northern Israel.

Palestinian President Mahmoud Abbas called the missile attack "state terrorism." The high civilian toll was certain to set militant groups on a course of even fiercer confrontation with Israel.

"The car that we hit was loaded with Katyusha rockets and launchers and they were on their way to launch those Katyusha rockets at Israel," an army spokeswoman said in Tel Aviv after the attack in the eastern outskirts of Gaza City.

Witnesses said an Israeli aircraft fired two missiles. The first hit the vehicle, causing it to crash into the pavement. Rescue workers raced to the scene and then a second missile hit, causing many of the civilian casualties. Hospital officials said nine civilians, including two children and three medics, and two Islamic Jihad militants were killed.

"Today we have said farewell to our martyrs and tomorrow Israel will say farewell to their dead," Islamic Jihad said.

Rockets could be clearly seen in the wreckage of a yellow van. The Israeli army said the projectiles could hit targets up to 20 kilometers away, a range far longer than the crude Qassam rockets usually fired by militants from Gaza.

Militants have fired more than 100 rockets into Israel since the Gaza seaside explosion, the army said. Israel pulled its troops and settlers out of Gaza last year and has said it will not tolerate cross-border rocket attacks.

On Monday, Prime Minister Tony Blair and Israeli Prime Minister Ehud Olmert agreed that negotiations on the Palestinian and Israeli borders could only be held if there was a renunciation of violence and an adherence to the peace "road map".

At a joint press conference after talks in London, Blair said the United kingdom, like other countries, wanted Israel to negotiate with the Palestinians on border changes.

The international community was agreed on how to solve the problem, he said.

A two-state solution recognizing a viable Palestinian state and Israel, a renunciation of violence and an adherence to the road-map for peace were all principles agreed by the outside world, he added.

Olmert said "the first policy of Israel is negotiations," and it was the chance for Palestinians to "realize their dreams" of an independent state.

But he warned Palestinian leaders that he is prepared to act unilaterally if they do not join him at the negotiating table. Israel would give the Palestinians until the end of the year to negotiate a peace deal, he said.

(China Daily, Xinhua News Agency June 14, 2006)