GAZA CITY, Gaza Strip — Palestinian militants blew up an Israeli armored personnel carrier on Tuesday, killing six Israeli soldiers in one of the fiercest battles in Gaza City in months. Seven Palestinians were killed, including one in an Israeli airstrike.

Militants displayed some of the remains of the dead Israeli soldiers, and they were warned that Israel would retaliate harshly if the body parts weren't returned for burial, security officials said.

For more than 16 hours, explosions and machine gun fire from tanks and helicopters were heard across Gaza City. Gray smoke rose into the air.

The army initially entered the crowded Zeitoun neighborhood for a pinpoint search for weapons workshops. After the attack on the armored personnel carrier, hundreds of soldiers flooded the area in search of soldiers' remains scattered in the blast.

The death of six soldiers — the highest casualty count in a single army operation in nearly two years — was expected to increase public pressure on Prime Minister Ariel Sharon to withdraw Israeli troops and settlers from the Gaza Strip. Sharon is pushing for a withdrawal, but the plan was vetoed by his Likud Party in a referendum last week.

Sharon summoned his Security Cabinet for a special meeting later Tuesday. Security officials preparing recommendations to the Cabinet said they would propose pinpoint attacks against Palestinian militants, but ruled out targeting Yasser Arafat, security officials said on condition of anonymity.

Sharon told parliament that Israel would strike back hard. "We will not stop fighting him (the enemy) and hitting him, wherever he acts and hides," Sharon said.

The Israeli army's southern front commander, Maj. Gen. Dan Harel, said soldiers would stay in Gaza until the bodies are recovered. "We are checking every roof and every balcony to find the remnants of the APC and the bodies of our soldiers," Harel said.

Asked about the display of body parts, Harel said, "I was disgusted."

Hamas gunmen displayed pieces of metal and bits of human remains they said they collected after the blast. Two masked men on a motorcycle held up a bloodied burlap sack with remains. Two other militant groups, the Al Aqsa Martyrs' Brigades and Islamic Jihad, said they also had remains of soldiers and were ready to negotiate with Israel.

Israel approached the International Red Cross to help retrieve the body parts. Red Cross spokesman Simon Schorno said the request was accepted, and Red Cross officials were in touch with Palestinian authorities.

The armored personnel carrier blew up around 6:30 a.m. as it was leaving Gaza City. The vehicle was packed with about 220 pounds of explosives, for use in blowing up weapons workshops. Combined with a roadside bomb detonated by militants, the explosives produced a powerful blast.

An Israeli military official, speaking on condition of anonymity, said the blast scattered body parts across a radius of about 300 yards in a densely populated area and troops were heaving difficulty retrieving the remains under heavy fire.

In all, seven Palestinians were killed — six in exchanges of fire and one in an Israeli missile strike on a car. At least three of the dead were gunmen. Hospital officials said 110 Palestinians were wounded, 14 of them critically, including an 11-year-old boy on life support with a head wound. Six Palestinians were hurt in the airstrike. It remained unclear why the car was targeted.

Palestinians remained defiant during a mass funeral for six of the dead. Thousands marched, and a masked Al Aqsa gunman said militants would keep fighting.

The Israeli raid began shortly after midnight, with three dozen Israeli tanks and several bulldozers rumbling into Zeitoun.

Soldiers took over several high-rise buildings, blasting open doors and setting up sniper positions. Attack helicopters fired machine guns and at least two missiles toward masked gunmen, while tanks fired machine gun rounds.

Hundreds of Palestinian gunmen participated in the fighting, and the army eventually blocked the main north-south road in Gaza to prevent more from reaching the area. Gunmen planted mines and fired automatic rifles and homemade anti-tank shells.

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Residents said one metal workshop and toy factory was damaged.

Palestinian Prime Minister Ahmed Qureia accused the Israeli military of trying to sabotage all peace hopes. "Each time there is hope for peace and for the resumption of the peace talks, Israel insists on going into places and escalating the situation," he said.

Israeli forces frequently enter Gaza towns to arrest or kill militants and destroy workshops where weapons, including crude mortars and rockets, are made. Israel says it has to act since Palestinian security forces do little to rein in militants.

Tuesday's military operation came a week after Palestinian gunmen killed a pregnant Jewish settler and her four daughters in a shooting attack in Gaza.

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