Israel airstrikes in Gaza rage on after deadly Hamas raid.

ISLAMABAD -- Israel battered Gaza on Sunday, a day after suffering its bloodiest attack in decades when Hamas fighters rampaged through Israeli towns, killing hundreds and abducting an unknown number of others, threatening a major new war in the Middle East.

In a sign the conflict could spread beyond Gaza, Israel and Lebanon's Iran-backed Hezbollah militia exchanged artillery and rocket fire, while in Alexandria, two Israeli tourists were shot dead along with their Egyptian guide. Overnight, Israeli air strikes had hit housing blocks, tunnels, a mosque and homes of Hamas officials in Gaza, killing more than 300 people, including 20 children, as Prime Minister Benjamin Netanyahu vowed "mighty vengeance for this wicked day".

In southern Israel, Hamas gunmen were still fighting Israeli security forces 24 hours after a surprise, multi-pronged assault during a rocket barrage smashed through security barriers and army bases to send hundreds of fighters into nearby towns. Israel's military, which faces questions over its failure to prevent the attack, said it had regained control of most infiltration points, killed hundreds of attackers and taken dozens more prisoner but was still fighting in some places. It said it had deployed tens of thousands of soldiers in the area surrounding Gaza, a narrow strip that is home to 2.3 million Palestinians, and planned to evacuate all Israelis living around the frontier of the territory. "We're going to be attacking Hamas severely and this is going to be a long, long haul," a military spokesman told a briefing

with reporters. In Gaza, Hamas spokesman Abdel-Latif al-Qanoua said the attack had been "in defence of our people", adding the group's fighters continued rocket strikes and were still conducting operations behind the lines. The attack represented the biggest and deadliest incursion into Israel since Egypt and Syria launched a sudden assault in an effort to reclaim lost territory in the Yom Kippur war 50 years ago. The conflict could undermine US-backed moves towards normalising relations between Israel and Saudi Arabia - a security realignment that could threaten Palestinian hopes of self determination and hem in Hamas' main backer, Iran.

Tehran's other main regional ally, Lebanon's Hezbollah, fought a war with Israel in 2006 and tensions have regularly flared since. "We recommend Hezbollah not to come into this and I don't think they will," Israel's army spokesperson said.

The debris from Saturday's...