GAZA CITY, Aug 29 (AFP) - Four members of a Palestinian family were killed by Israeli tanks shells in the Gaza Strip early Thursday, hours after the army took the first steps towards implementing a partial withdrawal in the area.

The second raid on the Gaza Strip in two days sparked furious reactions from the Palestinians, with a top adviser to Palestinian leader Yasser Arafat describing the shelling as a "massacre" and the radical Hamas vowing tougher retaliation than ever.

Israeli tanks stormed the Sheikh Ajleen neighbourhood south of Gaza City shortly after midnight, killing Rueida al-Hajeen, 55, her sons Ashraf, 22, and Nuhad, 17, as well as her nephew, Mohammad, 17, Palestinian medical sources said.

According to an Nampa-AFP reporter on the scene, Palestinian ambulances rushed to the scene but were barred by the Israeli army from rescuing the injured.

While the shelling that ripped through the neighbourhoood killed Rueida and Mohammad on the spot, Ashraf and Mihad bled to death during the hour that elapsed before medical services could arrive.

"We were sleeping in our homes when suddenly, we heard a bomb. Israeli tanks were invading the area, firing and shelling in all directions, and then I saw the al-Hajeen's house on fire," said Ismail Shamallakh, a neighbour whose house was also damaged in the incursion.

"Me and my brother tried to help bring the injured to shelter, but we had to run away under Israeli fire," he told Nampa-AFP.

Five other people were wounded in the shelling, all of them Rueida's sons, medical sources said. One of them, Mohammad, was said to be in serious condition.

The army said it had spotted "suspect individuals" in the area. It later added that it was looking into the incident, a month after 17 people, including 15 civilians, were slain in a controversial "targeted killing" against a Hamas military leader.

Ismail Haniya, a senior leader of the radical Islamic group Hamas vowed bloody retaliation for the killing.

"Our response will be a new escalation in our resistance," he told Nampa-AFP.

Hamas' smaller rival, Islamic Jihad, also expressed its ire, and both groups called on ther Palestinian Authority to stop all its contacts with Israel.

Top Arafat adviser Nabil Abu Rudeina branded the attack a "massacre," saying it was aimed at sabotaging efforts to obtain a progressive Israeli military withdrawal from Palestinian areas that have been reoccupied since the start of the intifada in September 2000.

But he said a meeting would go ahead between Palestinian interior minister Abdel Razaq al-Yahya and Israeli Defence Minister Binyamin Ben Eliezer on the next steps to take under the arrangement, which led to a troop withdrawal from the southern West Bank of Bethlehem 10 days ago.

Yayha himself confirmed to the Lebanese daily An-Nahar the meeting would take place, and added that a possible withdrawal from Hebron would be on the agenda.

The third security meeting between the two officials was slated for Wednesday but was called off by Israel, prompting Palestinian accusations that the Jewish state was attempting to renounce its commitment to a phased withdrawal.

Hours before the bloodbath south of Gaza City, in a timid move to keep the fledgling security pact alive, the army handed over security positions to Palestinian forces in the Gaza Strip late Wednesday.

"Under the understanding between Israel and the Palestinians on the Gaza Strip, Palestinian police went back to a number of posts, to enforce the law and order and alleviate the pressure on the population," military sources said Thursday.

US envoy David Satterfield arrived in the region Wednesday to discuss the state of the Palestinian reforms and try to rescue the faltering security arrangements, aimed at putting an end to the two-year-old spiral of violence that has left 2,462 people dead.

The deputy assistant secretary of state for Near East affairs met with top Palestinian negotiator Saeb Erakat and was due to hold talks with Israeli officials on Thursday.

Despite a prolonged respite for Israelis, with the most recent suicide attack coming nearly a month ago, Satterfield's visit comes against a backdrop of renewed violence in the occupied territories, as Israel continued its West Bank sweep for suspected militants.

In overnight and pre-dawn raids, Israeli troops nabbed seven Palestinians in Dahariyeh, south of Hebron, one in the Balata refugee camp near Nablus, one in the northern town of Tulkarem and two more in Hitzma, north of Jerusalem, an army spokesman said.

Two were also arrested in the Gaza Strip near the Gush Katif settlement bloc, shortly after a large explosive charge was discovered in the area, the spokesman said.

bur/jmm/al

Nampa-AFP WEB story ENDS (NAMPA 290921)