Palestinian President Mahmoud Abbas on Thursday said Israel's incursion into Lebanon has raised the specter of a large-scale Middle East war and urged world powers to intervene "to stop this serious deterioration."

"The expansion of the military action to the neighbor, Lebanon, is raising our fears of a new regional war," Abbas said after meeting Japanese Prime Minister Junichiro Koizumi in the West Bank city of Ramallah.

Israeli troops and aircraft pounded targets in southern Lebanon on Wednesday and Thursday after a brazen cross-border raid by Hezbollah guerrillas in which two Israeli soldiers were captured and eight others were killed.

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Abbas said there are no talks with Israel to secure the release of another Israeli soldier, Cpl. Gilad Shalit, whose June 25 capture by Hamas-linked militants has spurred another massive Israeli incursion into the Gaza Strip.

"There is no contact with Israel about the soldier, but I have said that the soldier must be released and the Palestinian prisoners must be released too," he said, referring to Palestinian demands that Shalit be exchanged for at least some of the estimated 9,000 Palestinians held in Israeli jails.