Israeli troops pulled out of the Gaza Strip today after a US appeal to end days of fighting that killed more than 100 Palestinians and rescue peace talks.
The Hamas Islamists who control the coastal enclave declared "victory" and vowed to continue firing rockets into Israel, launching one into the main southern city of Ashkelon shortly after the troops withdrew. One person was wounded.
"The invaders fled and the army of Jews was defeated," said a Hamas chant that rang out from loudspeakers in Gaza City, where several thousand supporters of the group took to the streets in celebration and took festive photographs with gunmen.
Israeli Vice Premier Haim Ramon said the five-day-long operation had run its course and the "dozens of deaths among the Hamas terrorists" would serve as a deterrent to further rocket fire.
A senior Israeli government official said there would be a "two-day interval" for a visit by US Secretary of State Condoleezza Rice.
Rice is to hold talks in Jerusalem and the West Bank city of Ramallah tomorrow and Wednesday on moving Israeli-Palestinian peace negotiations forward. Washington hopes a Palestinian statehood deal can be reached this year.
Israel's security cabinet plans to meet on Wednesday to consider the government's next move. On Sunday, Israel's Defence Minister Ehud Barak said his country would press on with the offensive against Hamas in Gaza.
"This very limited (Gaza) operation was intended to show Hamas what could happen, what you may call a 'prequel'," the senior Israeli official said.
"If they decide they've seen enough and stop the rockets, if they get the message, then we may get into a period of quiet. If they continue to fire the rockets, then there will be more operations like this one or worse," the official said.
Israel had been under pressure from its ally in Washington to halt the violence after Palestinian President Mahmoud Abbas suspended US-backed peace talks in protest at the bloodshed.
"The situation is grave and what resulted from the Israeli aggression was unprecedented since the 1967 war of Israeli occupation," said Palestinian Prime Minister Salam Fayyad.
The Palestinian Health Ministry said 116 Palestinians were killed in the Gaza offensive. Militant groups said about half of them were civilians. Fayyad put the death toll at 110 and said 250 people were wounded.
Many of the civilian casualties came when Israeli missiles fired by helicopters and planes hit buildings and homes that the army said were used by militants.
Overnight, Israel carried out several air strikes in the Gaza Strip, killing three militants and medical workers, Hamas said. The army said it had targeted workshops making rockets.
Two Israeli soldiers were killed in the offensive and on Wednesday an Israeli civilian was killed by a rocket, the first such death since May.
The Gaza violence touched off anti-Israeli protests in the West Bank, where a Jewish settler shot and killed a 17-year-old Palestinian in Ramallah after coming under attack by a crowd of rock-throwers, an Israeli police spokesman said.