Twelve Palestinians, including a 9-year-old boy and at least nine militants, were killed in the Gaza Strip yesterday, and some 40 were wounded during clashes between Palestinian militants and Israel Defense Force troops.

Two IDF soldiers were lightly wounded in the Israeli operation, which was the most extensive since Hamas took over Gaza two weeks ago, and the first since Ehud Barak became defense minister.

The IDF said the operation was an effort to thwart planned Palestinian attacks. Security forces have received intelligence reports that Palestinians were digging tunnels to smuggle terrorists into Israeli communities bordering Gaza, or into IDF posts in the area. The army said it was also searching for explosives.

Raid Fanuna, a senior Islamic Jihad leader and one of those responsible for the organization's Qassam rocket attacks on Israel, was killed in the Sajaiya neighborhood of Gaza City. The death toll included Iz a-Din Jundiya, 9, who died when an IDF shell hit his home in the city. The blast also killed another member of the same family, a 25-year-old man.

Three of the 12 Palestinians killed yesterday, apparently all militants, died in clashes in the Khan Yunis area in southern Gaza. The militants killed at both sites included operatives from Hamas, Islamic Jihad and the Fatah movement's Al-Aqsa Martyrs Brigades.

Palestinian sources said Fanuna was killed by an Israeli missile that hit his car, but the Islamic Jihad military wing, of which he was one of the founders, said Fanuna was killed by a car bomb. Islamic Jihad said Fanuna was one of the first to manufacture Qassam rockets and was No. 4 in the organization's hierarchy. The IDF did not comment on the incident.

Hamas said yesterday that the IDF operation was the result of a secret agreement between Prime Minister Ehud Olmert and Palestinian Authority Chairman Mahmoud Abbas, who met in Egypt on Monday.

The IDF operation began Tuesday night, with an incursion into the Sajaiya area, the Khan Yunis area and the Palestinian zone near the Karni crossing between Gaza and Israel. Palestinian militants fired at the troops and launched rocket-propelled grenades and anti-tank missiles at them, sparking return fire from the army. Combat helicopters provided cover for the troops and targeted the sources of Palestinian fire.

The IDF also arrested dozens of Palestinians wanted for questioning - several of whom were on the Israeli wanted list - during the operation. The detainees were transferred to the Shin Bet security service for questioning.

The two IDF troops hurt yesterday were wounded by fragments from an RPG, and were taken to Soroka Medical Center in Be'er Sheva for treatment. The tank damaged by the RPG was removed from the scene by an IDF bulldozer.

The IDF said yesterday's fighting in Gaza constituted a "defensive action," adding that it does not signal a change in the army's policy regarding the Strip. The troops went up to two kilometers into Palestinian territory to prevent Hamas and Islamic Jihad from carrying out attacks near the Gaza border and from securing a foothold there, the IDF said.

The army has also been planting explosives along the border fence in an effort to keep militants away from the area, and to create a buffer zone meant to force the Palestinians to launch Qassam rockets from deep within Gaza, making it less likely that they will strike Israel.

Nonetheless, the Palestinians fired four Qassams at southern Israel and six mortar shells at the Erez crossing yesterday. There were no injuries.

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