Warplanes on Wednesday launched missiles at open fields in northern and southern Gaza in a show of force meant to intimidate fighters, the military said. Separately, Israel attacked a rocket-making factory in southern Gaza.

Israeli forces also entered the disused international airport near Rafah in the Gaza Strip supported by helicopter gunships. The army has set up what it calls a control and observation point at the airport just inside the Gaza border.

Captain Jacob Dallal, a military spokesman, said that soldiers moved 2km inside the coastal strip.

Witnesses reported heavy artillery shelling near the long-closed Gaza airport outside of Rafah, just over the border with Israel. In Rafah, a shack where fighters produced and stored rockets was on fire after Israel attacked it, witnesses said.

Warplanes, meanwhile, flew low over the strip, rocking it with sonic booms and shattering windows. And soldiers in Israel backed up the assault, firing artillery into Gaza.

Medical and security sources said two Palestinians were killed and another seven, including a baby, wounded when a grenade accidentally exploded in the southern Gaza Strip on Wednesday.

Family members were playing with a grenade in the town of Khan Yunus when it exploded, killing 23-year-old Qassem Massud and his  one-year-old niece, Maissam, the sources said.

Punitive strike

The deployment is the start of an Israeli incursion into the territory to recover 19-year-old Corporal Gilad Shalit, who was captured on Sunday in an attack that killed two other soldiers.

On Monday, Ehud Olmert, the Israeli prime minister, promised a punitive strike if Shalit was not freed. Tensions have been high, with large numbers of Israeli troops deployed to the border.

Israeli airstrikes destroyed
bridges in the Gaza Strip

Israeli tanks occupied a part of Rafah, on the border with Egypt, Aljazeera correspondent Wail al-Dahduh reported on Wednesday morning, but the military had not entered residential areas.

One of the bridges hit by the airstrikes was in central Gaza, another near the town of Deir al-Balah and the third south of Gaza City, the Israeli military and Palestinian security officials said. There were no reports of casualties.

An Israeli military statement said the aim of attacking the bridges was "to impair the ability of the terrorists to transfer the kidnapped soldier".

Palestinian security officials said Gaza would be cut in two by hitting the bridges.

Missiles fired

Israeli warplanes fired at least nine missiles at Gaza's only power station, cutting electricity to 65% of the Gaza Strip, engineers at the station said.

The station's three functioning turbines and a petrol reservoir were engulfed in flames. The airstrike will also affect water supplies to the Palestinians because pumps in Gaza are powered by electricity.

An Israeli soldier prepares his
equipment outside the Gaza Strip

Negotiations to secure Shalit’s release appeared to have failed when the Israeli television station, Channel Two, quoted a source close to Egyptian and French-led mediators saying there was "zero chance" of recovering the soldier through talks.

Meanwhile, concerns about the fate of a missing West Bank settler grew after Palestinian fighters who purport to hold him displayed what they said was a copy of his identification card.

In a phone call to AFP, the armed Palestinian group, Popular Resistance Committees, threatened to kill a Jewish settler it claims to have kidnapped, unless Israel stopped the offensive.

Although there has been no official Israeli confirmation of the kidnapping, police confirmed they are looking into reports that a Jewish settler is missing in the West Bank.

In an interview with Aljazeera, a spokesman for the Palestinian group, Abu Abeer, said the settler held captive in the West Bank is an Israeli military college soldier named Eliahu Asheri, 18.