Israel sealed all border crossings with the Gaza Strip Friday, cutting the flow of vital supplies in an attempt to stop Palestinian rocket attacks on Israeli border towns. But the attacks continued, with 16 rockets falling in southern Israel, including one that damaged a day care center.

Israel hit back with air strikes against a rocket squad, a Hamas government building and a Hamas militia base, killing one militant and two civilians, Hamas said.

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U.N. officials warned that the Israeli closure of the Gaza passages would increase hardship in the impoverished territory of 1.4 million Palestinians.

The Gaza quagmire could complicate President Bush's efforts to prod the sides toward a final peace deal by the end of the year and sour newly-revived talks between Israel and Palestinian President Mahmoud Abbas' West Bank government.

Abbas spokesman Nabil Abu Rdeineh said Friday that Israeli operations in the Gaza Strip and West Bank "will negatively impact the negotiations, and we warn against the continuation of this policy."

Palestinian negotiators have urged the United States to stop Israel from "sabotaging" the negotiations, he said.

The pace of rocket fire intensified after an Israeli ground and air offensive against Gaza launch sites on Tuesday, in which 19 Palestinians were killed, including the militant son of a prominent Hamas leader.

Defense Minister Ehud Barak's decision to lock down the border was meant to pressure the Hamas rulers of Gaza to silence the rockets, ministry spokesman Shlomo Dror said.

Israel kept crossings into Gaza closed Friday morning, preventing the scheduled passage of about 20 truckloads of food, Dror said. The crossings, which normally work only a half-day on Fridays are routinely closed Saturdays, and may not open Sunday morning if the rocket fire continues, he said.

"It's time that Hamas decide to either fight or take care of its population," Dror said. "It's unacceptable that people in (the southern Israeli town of) Sderot are living in fear every day and people in the Gaza Strip are living life as usual."

He said that Gazans had sufficient stocks of food so that no one would go hungry, adding that about 9,000 cows were allowed into the strip in the past two months, enough for several weeks more.

"There is a government decision that there will not be a humanitarian crisis in Gaza," Dror said.

John Ging, the Gaza-based head of UNRWA, the U.N. agency responsible for Palestinian refugees, said the most immediate concern was the suspension of fuel deliveries, leading to reduced output from power plants.

"The supplies that are in most desperate need is the fuel," he said. "This is a very precarious situation." He said Israeli officials told him they would meet early next week to reevaluate the situation and decide whether to reopen the passages.

Since Hamas seized control of Gaza from Abbas loyalists last June, Israel has cut off all ties with the territory, although it generally allowed food, fuel and humanitarian shipments to pass.

In recent months, however, Israel has reduced fuel supplies in the hope that Gaza's population would pressure the militants to stop the rocket fire.

Hamas warned of homicide attacks in Israel if it did not end the sanctions and military operations.

"If the bloodshed in Gaza and the West Bank does not stop, there will be similar bloodshed in ... Tel Aviv," Hamas spokesman Hamad al-Rukeb said in a statement.

The last homicide attack claimed by Hamas was in Aug. 2005 , when a bomber blew himself up and severely wounded two security guards outside the bus station in the southern city of Beersheba. The last Hamas bombing to claim Israeli lives was in the same city a year earlier, when two bombers on separate city buses exploded themselves, killing 16 people and wounding 100.

Thirty-four Gazans have died in the surge of violence since Tuesday, mostly militants.

Hamas and other groups have fired more than 150 rockets and mortars since then, Israel says. The attacks caused no serious injuries, but have further traumatized battered residents of southern Israel. Twelve Israelis have been killed by rockets in the past six years.

An Israel air strike in northern Gaza Friday killed one member of a rocket launch squad and a civilian bystander, Hamas said. Another aircraft attacked the offices of the Hamas-run interior ministry in Gaza City. The building had been empty since it was severely damaged in a July 2006 air strike but it is in the heart of a residential neighborhood and hospital officials said a woman was killed and at least 46 other civilians were injured by flying debris and shrapnel.

Residents said the dead woman was a guest at a wedding party in an adjoining building.

An Israeli military spokeswoman said the strike, against what she called "a Hamas headquarters", was part of Israel's campaign against the rocket fire.

The air force also attacked a disused central Gaza base of Hamas security forces, where there were no casualties.

While increasing the pressure in Gaza, Israel has scaled back operations in the West Bank as it talks peace, but early Friday, Israeli troops in Nablus killed an armed, wanted member of the Al-Aqsa Martyrs Brigades militant group, the military said.