Islamic resistance groups, including Hamas and Islamic Jihad, ditched the shaky seven-week-old unilateral truce after an Israeli missile attack killed Ismail Abu Shanab, a US-educated Hamas political leader on Thursday, two days after a Jerusalem bus bombing that killed 20 people. Hamas said it carried out the attack.
Hamas has vowed to avenge Abu Shanab's killing, but says it is open to talks on a truce under new terms. Israel failed to officially recognise the last ceasefire and continued operations against so-called "wanted" Palestinians in the West Bank and Gaza.
"I think in political work it is possible to talk about a political step ... The leadership of the movement will study any political step presented," Hamas's Lebanon head Usama Hamdan said on Saturday.
Asked if Hamas would consider a new truce, he said, "We are ready to discuss any political ideas. But we are not ready to take positions before we know all the details."
Assets freeze 'meaningless'
US President George Bush said on Friday he had ordered the Treasury Department to freeze the assets of six Hamas leaders, including Hamdan, following Tuesday's attack.
"I think that (the freezing of Hamas assets) will increase the insistence of the sons of the movement on continuing the Jihad"
Hamas' Lebanon leader
Branding the perpetrators “terrorists”, Bush made no mention of Israel’s assassination of Abu Shanab, or repeated raids on Palestinian territory.
Hamdan said that Bush's move - which also freezes assets of five organisations accused of financially supporting Hamas - was meaningless.
"We don't have assets as individuals," he said.
"I think that this will increase the insistence of the sons of the movement on continuing the Jihad ... In an answer to this American move, I request the community give more monetary support to the resistance."
Other US officials indicated Israel should show restraint. White House spokesman Scott McClellan said that while Israel had the right to defend itself it should "keep in mind ... the effect of those actions on the peace process".
Appeal to US
Palestinian Prime Minister Mahmud Abbas had coaxed a ceasefire from resistance groups to shore up a US-brokered peace "road map" to end three years of violence and pave the way for the establishment of a Palestinian state by 2005.
Mahmud Abbas (L) says Israel must observe a new truce
Officials called on Washington to help mediate a new ceasefire on Saturday, but have said they wanted Israel to be a party to any new truce.
Palestinian negotiator Saeb Erekat asked senior US envoy John Wolf in a meeting in the West Bank to pressure Israel to halt military reprisals so "the Palestinian Authority can take action against militants", a senior Palestinian official said.
Palestinian officials said they hoped to renegotiate a new three-way truce with resistance groups to replace the previous unilateral ceasefire, which was not observed by Israel.
"We want a hudna (truce) between the whole Palestinian Authority and Israel, that Israel commit itself to as much as we do," Palestinian Foreign Minister Nabil Shaath told reporters.
Brushing aside US demands for a crackdown on resistance groups, the Palestinian Authority said it would not act until Israel ended a spate of military attacks in Palestinian areas.
"Now when the Palestinian territories are full of tanks ... I think that it will hinder any effort that we will take," Information Minister Nabil Amr told reporters.
The comments came shortly before the Authority closed three weapons-smuggling tunnels running between the Gaza Strip and Egypt in a bid to salvage the US-backed "road map" for peace.
Nine "illegal arms traders" were also arrested, Reuters reported.