Prime Minister Ehud Olmert indicated Thursday that he favored pinpoint strikes against Palestinian rocket squads in the Gaza Strip, rather than a large-scale operation meant to crush them, Israeli media reported.

"We have to remember that this war (against rocket fire) will not be over in one blow," the Haaretz newspaper Web site quoted the Israeli leader as telling reporters on his return flight from a five-day trip to the U.S.

Those calling for a broad, punishing offensive "need to remember that the terrorism will never end altogether," he said.

Olmert spoke a day after Palestinian rocket fire killed a 57-year-old Muslim woman in southern Israel.

Defense Minister Amir Peretz vowed a punishing response to the deadly attack, but no large-scale offensive was ordered. Israeli aircraft pounded several targets in Gaza throughout the night, but no injuries were reported.

Visit FOXNews.com's Mideast Center for more in-depth coverage.

Olmert's reported remarks on the plane appeared to indicate a rollback of his earlier assertions that Israel would expand its offensive against Palestinian rocket-launching operations.

An incursion earlier this month into the northern Gaza town of Beit Hanoun this month killed dozens of militants, but has not curtailed rocket fire.

In the first half of November, militants fired 117 rockets, including 71 that landed in Israel, the military said. In all of October, they fired 84 rockets, including 32 that landed in Israel.

The Yediot Ahronot newspaper's Ynet Web site quoted Olmert as criticizing Palestinian President Mahmoud Abbas for not doing more to curb the attacks, but pledging to continue diplomatic efforts.

On Wednesday, Abbas called on Israel to resume negotiations toward a final peace settlement, appealing to Israeli leaders not to "squander the chance for peace."

At the same time, Abbas insisted on a full Israeli pullout from all lands Israel occupied in the 1967 Mideast war -- a demand Israel has repeatedly rejected.

Although Olmert has agreed to meet with the moderate Abbas, skirting the Palestinians' militantly anti-Israel Hamas-led government, the two have not even managed to set a date to sit down together.

Abbas is afraid such an encounter would center on Israel's demand that Hamas-linked militants release a captive Israeli soldier, Cpl. Gilad Shalit. He wants assurances first that he would be able to claim concrete gains from such a meeting, such as the release of Palestinian prisoners, including Hamas Cabinet ministers and lawmakers, jailed in Israeli prisons.

Abbas issued his appeal for talks after returning from Cairo, where he met with international mediators to discuss efforts to form a government of experts to replace the Hamas-led government.

Abbas hopes this will bring an end to Western aid sanctions that have battered the Palestinian territories, but that is not assured. Hamas, which is to appoint some of the new government's ministers, refuses to recognize Israel, a key international demand for lifting the funding boycott.

Complete coverage is available in FOXNews.com's Mideast Center.