'When they heard the explosion, the Israelis went crazy. They were shooting everywhere'

The message that had been blaring through the loudspeakers of many Gaza mosques was unequivocal: "We send congratulations to the people and to Hamas, who tonight killed seven Israeli soldiers in Jabaliya. Give thanks to God for this successful operation, which destroyed an Israeli tank, killing all the soldiers inside."

The message that had been blaring through the loudspeakers of many Gaza mosques was unequivocal: "We send congratulations to the people and to Hamas, who tonight killed seven Israeli soldiers in Jabaliya. Give thanks to God for this successful operation, which destroyed an Israeli tank, killing all the soldiers inside."

There was no shortage of residents in this overcrowded refugee camp to discuss the incident yesterday. One, Ibrahim Assaliah, a doctor whose own cousin died from Israeli fire in his arms last week at the camp's Kamal Adwan hospital, said witnesses had seen the Israelis' bodies being transported by military ambulance through a village in northern Gaza on Monday night.

Two masked gunmen from a separate faction, the al-Aqsa Martyrs Brigade, in a position protected by sandbags and a shop awning to hide them from an Israeli drone hovering overhead, pointed out that Hamas's military wing had confirmed the Israeli deaths and shouted, when asked about the incident, "Thanks to God."

Several said the scale of retaliation proved how grave the incident had been for Israel. A civilian resident, Ahmed Mustafa, 24, said: "We heard the explosion. The Israelis went crazy after it. They were shooting randomly everywhere, and there was shelling from the tanks." He said that the Israeli reaction was unlike anything else since the army began "Operation Days of Penitence" six days ago, after two Qassam rockets fired from the camp killed two children in the Israeli border town of Sderot.

Except that there were no Israeli bodies to recover. An explosion did occur near an Israeli armoured vehicle on Monday night; there may, too, have been bursts of heavy shooting by troops soon afterwards. But no soldiers were killed. That the story was given so much currency on the streets of Jabaliya says much about the psychology of its residents since last Wednesday's incursion. Something as grim could still happen of course; 11 soldiers were killed when two armoured personnel carriers were blown up in Gaza last May. But it hasn't so far in the present operation.

Yusef al-Sultan, 55, said: "Maybe people believe it to lift their spirits. I don't think it happened. Out of anger, out of despair, that's why they believe it."

For the balance of casualties has been overwhelmingly on the Palestinian side. While four Israelis, including the two children in Sderot, have been killed in Gaza during the past week, only one Israeli soldier has died in the engagement itself. More than 75 Palestinians had been killed by last night. Israeli forces killed Bashir al-Dabbash, the commander of the armed Islamic Jihad faction for the occupied Palestinian territories, in a missile strike on his car as he drove through Gaza City. Hours later a missile strike killed two members of the al-Aqsa Martyrs Brigade in Jabaliya camp.

The army says that the large majority killed were militants; human rights groups say that nearly half were civilians; and hospital officials said yesterday that 22 of the dead were under 18, including several children; at one of many mourning tents in Jabaliya yesterday the distraught father of Mohammed al-Najar, a 12-year-old boy killed by Israeli fire on Sunday, was fighting to retain his composure as he tried to greet friends and neighbours.

In a separate incident in Rafah, a 13-year-old girl, whom the army admitted it had wrongly accused of trying to plant a bomb, died in what Palestinian medics said was a fusillade of 20 bullets.

The level of casualties alone ­ higher already than the headline-making death toll after the Israeli army's incursion into Rafah in May ­ makes it more surprising that events in Gaza have not attracted more international interest. Whether this is because they are overshadowed by Iraq, or because there is no debate on the Israel-Palestine conflict in the US election, the lack of international focus contrasts sharply with the attention given to it by both Israelis and Palestinians alike. This is about more than the fact that two fatal Qassam attacks this year from Gaza ­ attacks which the Sharon government is trying to prevent ­ raise at least the long-term spectre that, however unreliable, they could be used as a crude means of attacking some Israelis in the West Bank despite the separation barrier. Both sides are also seeking to wage a battle for hearts and minds in the conflict.

Hence the now shaky claim by the Israelis that a UN ambulance had been used to transport Qassam rockets. Last night the army admitted that it was "impossible to swear" that video footage from an unmanned drone showed a rocket being loaded into the ambulance, and not a stretcher as the United NationsRelief and Works Agency has insisted.

Had UNRWA's Peter Hansen not breezily admitted that Hamas members were on its payroll, Israel's backtracking might have looked a clear-cut victory for the UN.

Hence too, the baseless faction-fuelled claims that seven Israeli soldiers had been killed on Monday night.

Mohammed al-Najar's cousin Hussam, an English-speaking Palestinian Authority sanitation engineer, bleakly struggled to explain the wishful thinking of many Jabaliya residents, despite what looks like increasingly futile armed resistance. "It's the people that lie to themselves," he said. "The truth does not help us. They wish that every Israeli that comes to kill us will be killed so they start to believe it."