Palestinians hold Israelis' remains to ransom for release of prisoners

The Israeli Army fought a fierce day-long battle with Palestinian militants yesterday as it tried to recover the seized body parts of six of its soldiers killed when their armoured troop carrier was blown up.

The Israeli Army fought a fierce day-long battle with Palestinian militants yesterday as it tried to recover the seized body parts of six of its soldiers killed when their armoured troop carrier was blown up.

In a macabre development, armed factions, whose members displayed some of the body parts for photographers, said that they were willing to negotiate their handover, apparently in return for the release of Palestinian prisoners.

The Army publicly rebuffed the offer and began what it said were intensive house to house inquiries to recover the missing body parts. Heavy gunfire continued in Gaza City's Zeitoun district, whose southern limit borders the frequently attacked Jewish settlement of Netzarim. Hospital officials said that seven Palestinians had been killed during the day and at least 100 injured.

As dusk began to fall and a cloud of grey smoke billowed amid the occasional sound of gunfire, Israeli helicopters could still be seen and heard patrolling above Zeitoun. The army's southern front commander, Major General Dan Harel, said soldiers would remain in Gaza until the bodies of the dead soldiers were recovered. "We are checking every roof and every balcony to find the remnants of the APC and the bodies of our soldiers."

The troop carrier had been leaving Gaza city at about 6.30am when it was blown up after taking part in what the Army said had been an operation to find and destroy weapons workshops. The attack inflicted the highest casualties on Israeli soldiers in any single operation of the past 18 months. An Israeli helicopter missile attack on a car not far from the main fighting during the afternoon left a teenage bystander dead and six other people injured. It was unclear what the target of the strike had been.

A statement by Hamas's military wing, which claimed responsibility for the attack on the troop carrier, said that the vehicle had been lured into an area planted with explosives and then also attacked by a Batar rocket. Israeli army sources that the vehicle had itself been loaded with 220lb of explosives used for destroying workshops.

Ariel Sharon, the Israeli Prime Minister, summoned his security cabinet to discuss the sudden deterioration of events in Gaza after telling the Knesset: "We will not stop fighting him [the enemy] and hitting him, wherever he acts and hides." One of the six dead soldiers was named last night as Eitan Newman from Jerusalem, believed to be a member of an immigrant family from Britain.

The deaths of the soldiers may well sharpen the already divisive debate over Mr Sharon's plan to "disengage" from Gaza by withdrawing more than 7,500 Israeli settlers from the Gaza strip. They came only days after Shaul Mofaz, the Defence minister, said that the Gaza settlements had been a "mistake" and were not part of Israel's "map of security interests".

Supporters of the Sharon plan will argue that the soldiers' deaths underline the case for withdrawal, while opponents are likely to say that such a move would be seen as a retreat in the face of the armed factions.

As ambulances, sirens blazing, drove along the northern section of Salahadeen Street in Zeitun to the city's main Shifa hospital, balaclava-clad militants carrying AK-47s and Qassam rockets patrolled on street corners.

Israelis attacked militants a few hundred yards away with machineguns and helicopter missiles while Palestinian gunmen reportedly planted mines and fired automatic rifles and homemade anti-tank shells. At one point the crowd of onlookers fled at the sound of an Israeli helicopter, apparently the one that launched the missile attack outside a car workshop soon afterwards.

Kamal Hajazi, 48, whose 15-year-old son Yusef was killed in the missile attack on the Peugeot 504, said his son had been on his way home from school. Choking with grief and rage he said: "He was my youngest son. I have never been part of this conflict. All I wanted to do was earn my livelihood to look after my family. This will increase our hatred. They want a Muslim and a pacifist like me to hate them."

Major-General Harel said that the Army owed it to the dead soldiers and their families to recover the bodies, a practice of special importance in Jewish religion and culture. Balaclava-clad militants brandished a bag that they said contained remains of the soldiers. A French reporter was shown a charred leg.

Ahmad Bustan, 13, claimed that he walked off with the head of one soldier on a pole after discovering it near the site of the explosion. He said: "I carried the head of a Jew. People followed me. We kicked it and we spat on it."

He added that members of the armed factions - all three of which claimed last night to be holding body parts - had taken the head from him.

A religious leader, the Mufti of Gaza Abdel Karim Kahlout, said last night that it was "forbidden in Islam to disfigure a dead body regardless of who is the killer and the victim.This is backed up in the verses of the Koran and the sayings of the prophets."