Palestinian militants blew up an Israeli army base at the Gaza-Egypt crossing Sunday by sneaking more than a ton of explosives through a tunnel, killing five Israeli soldiers and wounding five in the largest Palestinian attack in the month since Yasser Arafat's (search) death.

Hitting back, Israeli helicopters fired at least five missiles at targets in Gaza City early Monday, witnesses said. There were no reports of casualties. One missile started a fire at an abandoned metal workshop, while the other target was an empty house near the Islamic University, they said.

Also Sunday, imprisoned Palestinian uprising leader Marwan Barghouti (search) declared in a letter that he would throw his support to mainstream candidate Mahmoud Abbas (search) in a Jan. 9 election to replace Arafat, dropping out of the race. The move rids Abbas of his strongest rival and wards off what could have been a split in the leading Fatah faction of the PLO.

For his part, Abbas — who has stepped in as interim Palestinian leader until the elections — apologized to Kuwaitis for Palestinian support of Saddam Hussein (search) during the 1990-1991 Gulf War — his latest gesture to mend fences with Arab nations offended by Arafat.

"Yes, we apologize for what we have done," he said after arriving in Kuwait, responding to reporters' questions about many Kuwaitis' long-standing demands for an apology.

Arafat supported Iraq in its 1990 invasion of its tiny, oil-rich neighbor and opposed the subsequent U.S.-led Gulf War that liberated it. He never visited Kuwait afterward.

In the violence along the Gaza-Egyptian border, the military said in a statement early Monday that five soldiers were killed and five were injured, including two seriously, in the explosion. The statement said two Palestinians charged the base and opened fire after the blast, and soldiers shot them dead.

Palestinians said one attacker was killed and the other escaped. The blast collapsed several structures at the crossing and damaged others.

The attack was another sign that the lull in violence after Arafat's death on Nov. 11 was over. On Tuesday, an Israeli soldier was killed in a blast at the entrance to another tunnel near the Gaza-Israel border, setting off Israeli retaliation that killed four Palestinians.

Palestinian mortar and rocket barrages have hit Jewish settlements in Gaza daily, and militants have resumed firing homemade Qassam rockets at Israeli towns just outside Gaza. Israeli forces have returned fire, wounding several Palestinians.

Israeli army spokesman Capt. Jacob Dallal said two explosions rocked the border terminal at Rafah.

"This was a very large, well coordinated, planned attack against an international crossing, used by Palestinian civilians to cross into Egypt," Dallal said, adding that the crossing would be closed until further notice.

Israel TV defense analyst Yoav Limor called the blast the result of an "intelligence failure."

Palestinians in the area said they heard a loud explosion followed by machine gun fire. Palestinians said one gunman was killed in the exchange of fire, and a civilian was also killed. Unconfirmed reports said two Palestinian bombers were involved in the blasts.

A Palestinian militant giving his name only as Abu Majad claimed responsibility in the name of the Fatah Hawks, an offshoot of the mainstream Fatah Party, and the violent Islamic Hamas.

A Hamas official, speaking on condition of anonymity, said 1.5 tons of explosives were set off in the blast, and a second, smaller explosive was detonated later. Masked Hamas militants said a gunman tried to kidnap a wounded soldier but killed him because the soldier resisted.

Hamas' representative in Lebanon, Osama Hamdan, rejected calls for a halt to attacks on Israel and threatened new, unspecified types of retaliation against the Israeli occupation.

"The talk about a truce or a cease-fire is pure speculation and illusion. The [Israeli] enemy is still occupying our land. ... The next few days will witness new lessons against the Zionist occupation," Hamdan told about 2,000 Hamas supporters in Lebanon's Ein el-Hilweh refugee camp on the outskirts of the southern port city of Sidon.

Abu Majad said the explosives-filled tunnel was 800 yards long. He said the attack was retaliation for what he called "the assassination" of Arafat, who died in a French hospital. Some Palestinians claim he was poisoned by Israel.

Raanan Gissin, a top aide to Prime Minister Ariel Sharon, told Associated Press Television News the attack could jeopardize efforts to normalize Israeli-Palestinian relations and restart peace moves after Arafat's death.

"Unless there is decisive and sustained effort taken to dismantle the terrorist organizations, it will be impossible to move toward normalization and toward political negotiations," he said, demanding action by the Palestinian Authority.

Hours before the attack, Israel's Cabinet decided in principle to release 100-200 Palestinian prisoners as a gesture to Egyptian President Hosni Mubarak for Egypt's release last week of Azzam Azzam, an Israeli Arab who served eight years in prison on espionage charges.

Gissin said none of the prisoners to be freed were linked to fatal Palestinian attacks.

Palestinian officials said Israel should be coordinating prisoner releases with them. "Usually, the unilateral releases have never been satisfactory," Cabinet Minister Saeb Erekat said.

An official in Sharon's office, speaking on condition of anonymity, said the Gaza attack would not affect the prisoner release.

Barghouti's decision to drop out of the race was announced in Ramallah, where his associates called a news conference to read a letter from his prison cell. The letter was harshly critical of the Fatah leadership, but Barghouti threw his support to Abbas.

Ahmed Ghneim, who read out the letter, said Barghouti would drop out of the race.

Barghouti's wife, Fadwa, was to formally withdraw his candidacy Monday.

In the letter, Barghouti made a list of demands of Abbas. He rejected moves to disarm militant groups — a key Israeli demand — and said no agreement should be made without release of all prisoners. He did not present the demands as conditions for his support.

Israel has said Barghouti, serving five life terms after convictions in deadly Palestinian attacks, will not be freed.

Barghouti was the West Bank leader of Fatah when he was captured by Israeli forces in 2002. After Fatah nominated Abbas, Arafat's longtime deputy, as its candidate, Barghouti registered to run as an independent, drawing harsh criticism from Fatah faithful for splitting the party.

Polls last week showed Barghouti and Abbas running a close race.