Israeli troops killed seven Hamas militants, including a top rocketmaker, and two other Palestinians, including a girl, died Saturday, the fourth day of an Israeli offensive against Palestinian rocket squads in and around the northern Gaza border town of Beit Hanoun.

A municipal official said the town's electricity was cut and water was in short supply. Palestinian President Mahmoud Abbas appealed for United Nations intervention to stop the Israeli operation.

In the latest incident, a 12-year-old girl was shot in the head and killed by an Israeli sniper, Palestinian officials said. The Israeli military said the sniper was aiming at an armed militant and hit the girl by mistake. The military expressed regret.

Despite the fighting, Palestinian negotiators said Saturday they were close to agreement on forming a new government they hope will be acceptable to the West and end an international freeze on aid to the cash-strapped Palestinian Authority. The Hamas government of Prime Minister Ismail Haniyeh is shunned by the international community for its refusal to recognize Israel and renounce violence.

Officials close to Abbas and Haniyeh said progress is being made on a Hamas proposal to set up a government of experts who have some ties to Hamas and Abbas' Fatah movement, respectively. Hamas would be given eight Cabinet seats, Fatah four, and several smaller groups one each, meaning Hamas would control any Cabinet vote. The new prime minister would also have Hamas ties, according to the officials.

The new government's program, the key sticking point in the past, would be intentionally vague, including on a possible recognition of Israel, the officials said. Hamas leaders are to review the proposal Saturday and make a decision Sunday on whether to present it as the official offer.

Negotiations have broken down repeatedly in the past, despite optimistic forecasts.

In Saturday's Gaza violence, Israeli aircraft killed a Hamas rocketmaker in a missile strike on his minivan and ground forces blew up a weapons storehouse. Six more Hamas gunmen were killed in separate incidents and a civilian died when his house, apparently weakened by the shock of explosions, collapsed on him, according to Palestinian reports .

Forty-three Palestinians have been killed since Wednesday in the military's campaign in the town of Beit Hanoun, on Gaza's border with Israel. More than 200 people have been wounded in the sweep so far, including 29 who are in critical condition, Palestinian health officials said. One Israeli soldier has been killed in the fighting and one seriously wounded.

The deputy head of Beit Hanoun's town council, Tisyan Hamad, said the destruction wreaked by the latest sweep is worse than anything the town has suffered in past Israeli operations.

"There's no electricity...the people have no water, no food, telephone lines are cut, the infrastructure is damaged...there are Israeli special forces in houses, it is very difficult. This is the most difficult incursion Beit Hanoun has ever witnessed," he said.

The Israeli military says it has teams of liaison officers working with Palestinian officials to maintain deliveries of food and medical supplies, repair damaged power lines and facilitate the evacuation of the Palestinian wounded.

The army says the town was targeted as a major launching ground for rockets on Israeli communities nearby.

Abbas on Saturday sent a message to the U.N. Security Council asking it to rein in the Israeli military, his spokesman said.

"He asks the members of the council to move quickly and discuss the tragic situation in the Palestinian territories caused by the Israeli aggression that has so far led to the killing of 42 Palestinians," Abbas spokesman Nabil Abu Rdeineh said in a statement.

In Gaza, a spokesman for the small but violent Popular Resistance Committees, said the Israeli operation jeopardized prospects for the safe release of Gilad Shalit, a young Israeli soldier captured by Hamas-allied militants in June. A spokesman for the group, using the alias Abu Abir, also said Israel would face a wave of suicide bombings if the offensive wasn't halted within two days.