Israel has pulled back its troops from the Gaza Strip with an army spokesman saying that military operations in the territory were ‘winding down’.
The move on Monday came after an intense Israeli assault on the territory killed eight more Palestinians overnight, adding to the more than 100 people killed in past six days.
The Israeli army spokesman said: "Almost all our forces have already returned to Israel."
Hamas has welcomed the Israeli withdrawal and said it signalled a ‘victory’ for the Palestinians.
Mahmoud Abbas, the Palestinian president, had suspended all contact with Israel over its assault on Gaza.
Overnight, Israel attacked Gaza from both land and sea with naval ships shelling the territory.
The EU, UN and the Catholic pope joined Abbas on Sunday in demanding an immediate halt to the violence.
Israel says the raids are in ‘self-defence’, aimed at curbing homemade rockets being fired over the border from the Hamas-controlled territory.
Nine rockets slammed into southern Israel, wounding four people on Sunday, Israeli ambulance workers said.
Two people were killed by Israeli artillery shelling at the Jabaliya refugee camp, raising the number of Palestinians killed on Sunday to 10.
At least a third of the Palestinians killed over the past six days have been children, according to medical sources.
Slovenia, the current EU president, issued a statement on Sunday condemning Israel’s attacks as Javier Solana, the European body’s foreign policy chief, was dispatched to meet leaders in Israel and the West Bank.
"The presidency rejects collective punishment of the people of Gaza. Such activities are contrary to international law," the statement said.
Leaders Respond to Gaza Assault
"The presidency at the same time reiterates its condemnation of continued firing of rockets into Israeli territory and calls for its immediate end."
Ban Ki-moon, the UN secretary-general, joined his voice to growing global denunciations of the attacks that left more than 60 Palestinians dead on Saturday alone.
Addressing an emergency session of the security council in New York, Ban also called on Palestinian fighters to stop firing rockets into Israel.
He said: "While recognising Israel’s right to defend itself, I condemn the disproportionate and excessive use of force that has killed and injured so many civilians, including children … I call on Israel to cease such attacks."
"I [also] condemn Palestinian rocket attacks and call for the immediate cessation of such acts of terrorism."
Abbas designated Sunday a day of mourning.
He ordered "the suspension of negotiations … until [Israeli] aggression is stopped", a senior aide to Abbas said in the West Bank city of Ramallah on Sunday.
Nabil Abu Rudeina, an Abbas spokesman, said in a statement: "The negotiations are suspended, as are all contacts on all levels, because in light of the Israeli aggression such communication has no meaning."
Arye Mekel, an Israeli foreign ministry spokesman, said Abbas’s decision was a mistake and expressed hope that the talks would resume "in the very near future".
However, there is no sign that the Israeli government is ready to call off an offensive that has taken troops deeper into and in larger numbers than at any time since Israel ended a military occupation of Gaza in 2005.
Ehud Olmert, Israel’s prime minister, said: "Nothing will prevent us from continuing activities to defend our residents. No one has the right to preach morals to the state of Israel for taking elementary steps of self-defence."
Speaking on national radio, Israel’s defence minister, Ehud Barak, followed up, saying: "We will continue our action with all our strength and we need to prepare for escalation, because a broad ground operation is real and tangible."
The director of the United Nations Relief and Works Agency in Gaza however, told Al Jazeera the attacks on the strip were in nobody’s interest.
Speaking about the situation in territory, John Ging said: "The crossing points have been closed for days. [We are] struggling to keep our food aid going – remember a million people are food aid dependent – and we’re at our wits end to understand how this will lead to the peace and stability that we all so desperately need."
West Bank Clashes
As Gazans mourned the dead, clashes between Palestinians and Israeli troops erupted in the Shufat refugee camp in occupied East Jerusalem, Hebron, and Belin as well as other areas across the West Bank.
Mahmoud Masalmeh, a Palestinian youth from Beit Awa village in west Hebron, was shot dead by Israeli troops during confrontations in the village.
More than 40 Palestinians were injured, three of them seriously, as the demonstrators clashed with Israeli troops.
Hundreds of West Bank residents holding Hamas and Fatah flags staged rallies and appealed for national unity in an atmosphere that is being compared to the situation at the start of the second intifada in 2000.
In Lebanon, up to 1,000 people waving Lebanese and Palestinian flags rallied near the Israeli border against the continuing attacks on Gaza.
The demonstrators, at the Fatima Gate border point near the southern village of Kfar Kila, shouted "Death to Israel" and "The blood of our sons in Palestine will not be in vain".
Egypt, meanwhile, has agreed to open the Rafah border crossing to let injured Palestinians receive medical treatment.
Responding to a request by the Palestinian Authority, Egyptian authorities permitted 250 injured Gazans to enter Egypt through the controversial crossing.
Egyptian police also reported thousands of university students holding protests across the country, calling for Arab leaders to stop Israeli aggression and support the Palestinians.
The bloodshed in Gaza jeopardises US-backed peace talks between Israel and the Palestinian Authority. Condoleezza Rice, the US secretary of state, is due to meet Abbas and Olmert later in the week.
Olmert said striking at Hamas only advanced the cause of peace, and "the Palestinian leadership – the one with which we wish to make peace – understands this".
The Israeli prime minister has been under pressure to launch a broader offensive, especially after Palestinian fighters began firing longer-range Katyusha rockets at Ashkelon, a city of 120,000 people 11km north of Gaza.
Hamas has said such salvoes would stop if Israel abandoned operations in the Gaza Strip and raids against activists in the occupied West Bank.
(Aljazeera and agencies)