Israel has moved tanks, artillery and infantry into positions inside the north end of the Gaza Strip to stop the militant Palestinian group Hamas firing rockets at the Israeli town of Sderot, which has been partially evacuated. Israeli airstrikes have been targeting Hamas military commanders in their Gaza hideouts. It's the most serious confrontation between Israel and Hamas in six months.
Inside Gaza, gunmen from Hamas and its Palestinian rival Fatah have been fighting each other for the past week. Dozens of Palestinians have been killed. The street battles have destroyed a unity government formed two months ago by Hamas and Fatah to avoid such clashes, and dampened hopes of peace talks with Israel.
Israeli Prime Minister Ehud Olmert is under pressure to respond to Hamas rocket attacks and is fighting for political survival in the face of criticism of his handling of last summer's war in Lebanon.
Trying not to take sides
But although Israeli airstrikes on Hamas positions are likely to continue for as long as rockets are fired at Israeli towns, military analysts here say it's unlikely Israel will launch a full-scale incursion into Gaza for fear of uniting Hamas and Fatah into a common enemy.
Maintaining a measured response to Hamas rocket attacks allows Israel to refrain from openly taking sides in the Hamas-Fatah fight, although Hamas has accused Israel of working with Fatah fighters headed by Palestinian President Mahmoud Abbas.
Fatah fighters have been losing ground to Hamas in Gaza over the past week partly because Hamas appears to have been better motivated. Western military observers say Fatah forces have fought well in one battle, but that Hamas fighters are heavily armed and well trained.
Israel can take little comfort from two Palestinian factions battling each other for control of Gaza because one day the fighting and the sentiment of confrontation behind it could spread to the West Bank where it would be difficult and costly to contain.