GAZA CITY, Gaza Strip (AP) – The head of the Hamas-led Palestinian government called Saturday for a truce in the Israeli offensive in Gaza, but Israel demanded that Hamas first free a captured Israeli soldier and halt rocket attacks on its southern towns.

Israeli troops scaled back their operations to two spots in Gaza as fighting claimed the lives of six Palestinians, raising the death toll to at least 44 since the incursion began last week.

Among the dead were a mother and two of her children killed by an explosion at a house near Gaza City. Israel’s military initially denied responsibility, but later said an airstrike aimed at militants in the area struck a street instead. It said it was checking reports of civilian casualties.

Israeli troops entered the Gaza Strip on June 28, three days after Hamas militants captured an Israeli soldier during a cross-border raid, and they have been battering the coastal strip with heavy artillery barrages and airstrikes.

Palestinian Prime Minister Ismail Haniyeh urged Israel on Saturday to halt the offensive, release Palestinian prisoners and resume indirect talks about the captured soldier through international mediators. But he did not offer to free Cpl. Gilad Shalit, 19.

“We want to activate this initiative to bring the region out of this whirlpool of blood,” Haniyeh said while touring Beit Lahiya, the hardest-hit Gaza town.

Hamas often sends out conflicting signals, however, in part because of divisions between its more militant leaders in Syria and more pragmatic politicians in Gaza. Israel has accused the Hamas political chief, Syrian-based Khaled Mashaal, of ordering Shalit’s capture.

Aides to Israel Prime Minister Ehud Olmert said he would not accept a truce until Shalit was freed.

The militants have demanded the release of Palestinian prisoners held by Israel in exchange for Shalit.

Israel has said it would not negotiate, but some Israeli officials have signaled they were open to an Egyptian proposal under which the soldier would be freed unconditionally, and Israel would later release some of its 9,000 Palestinian prisoners as a goodwill gesture.

While leaders spoke, the booms of Israeli artillery in northern Gaza could be heard in Gaza City, 3 miles to the south, where 400,000 Palestinians live in jam-packed neighborhoods along the Mediterranean Sea. Black smoke rose high in the sky, while Israeli warplanes raced overhead.

Tanks later pulled out of Beit Lahiya, leaving a wide swath of destruction after trying to carve out a buffer zone to make it harder for militants to launch rockets at Israel.

Troops also left nearby Beit Hanoun and three former Jewish settlements in northern Gaza that Israel abandoned nearly a year ago when it unilaterally withdrew from the territory.

By evening, Israeli soldiers were in position only at the defunct airport in the southern town of Dahaniye and in the area around the Karni passage in the north, the main cargo crossing for goods traveling between Israel and Gaza, the military said.

Dozens of tanks and bulldozers stood some 500 yards from Gaza City, near the crossing. The army said that force was searching for tunnels being dug by militants to attack soldiers. Shalit was captured June 25 by militants who tunneled into southern Israel and attacked a military post.

Capt. Jacob Dallal, an army spokesman, said Israeli troops were repositioned because they had accomplished their objectives in northern Gaza – drawing militants into direct combat.

“We much prefer to engage these people with the army as opposed to having these people fire rockets at schools in Askhelon and Sderot,” he said, referring to two southern Israeli towns that have come under rocket fire.

Most of the Palestinians killed in the offensive have been gunmen, but civilians also have died and more than 160 people have been reported injured.

Hundreds of mourners marched through Gaza City carrying victims wrapped in green Hamas flags. Some shouted for revenge against Israel. Others fired guns in the air.

A funeral procession also was held in Beit Lahiya. One woman, dressed in black from head to toe, in the custom of devout Muslim women, wailed as the procession passed by.

Hamas militants remained defiant in Beit Lahiya after Israeli troops left, inviting TV crews to a news conference in front of a building. Dressed in black face masks and Hamas headbands and carrying AK-47s, the militants condemned Israel.

“We warn the Zionist enemy not to invade Gaza again. We have prepared surprises for them if they do,” said one unidentified militant.

Tanks driving through the narrow streets of Beit Lahiya had shorn off outer walls of buildings, torn down electricity poles and carved up asphalt. Facades of buildings were marked by bullet holes.

Bulldozers had torn up fields, knocking down trees and greenhouses to deny militants hiding places. As Palestinians combed through the wreckage, removing a dead goat from one heavily damaged dwelling, a U.N. truck arrived with drinking water.

Farmer Aref Sultan, 45, seized on the lull to move his wife and seven children, ages 2 to 16, to a relative’s home farther away from the combat zone. Sultan said the family had been pinned down in their Beit Lahiya home.

“We went through 24 hours of terror,” he said as the family loaded food and clothes into a pickup truck. “Shots were coming from all directions … and the tanks were approaching our house. The children, and especially my 2-year-old son, Samir, were screaming all the time.”

In southern Gaza, hundreds of Palestinians living near the airport fled their homes for a shelter in a vacant school set up by U.N. officials.

John Ging, the new head of the U.N. Relief and Works Agency in Gaza, warned that Israel’s military campaign has led to a humanitarian crisis. “Water, food, electricity, sanitation – these are the problems. The situation doesn’t get more basic than that,” he said.

Sixty-five U.S. citizens, many of Palestinian origin, left Gaza on Saturday in a convoy escorted by U.S. consular officials.

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Associated Press writer Sarah El Deeb in Beit Lahiya contributed to this report.

AP-ES-07-08-06 1626EDT

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