GAZA CITY, Dec 26, (Agencies): Israel and Palestinian militants traded threats on Sunday amid fresh skirmishes along the tense Gaza Strip border in which two Islamic Jihad fighters were killed.
The escalation of violence comes on the eve of the second anniversary of Israel’s devastating Operation Cast Lead assault on the Hamas-controlled Gaza Strip, and follows weeks of rocket fire from Gaza and retaliatory Israeli air raids.
Turning up the rhetoric, both sides said they were prepared for another round of bloodletting.
“I hope there is no need for another operation like ‘Cast Lead,’” Deputy Prime Minister Silvan Shalom told public radio ahead of a cabinet meeting.
“But if this situation continues — if missiles keep being smuggled in without hindrance, if they continue shooting into Israel, trying to hit innocent civilians — then, obviously we will have to respond and respond with all our force,” he said.

And at the funeral for two members of Islamic Jihad killed in an early morning exchange of fire with Israeli troops, mourners called on the military wings of Islamic Jihad and Hamas to take revenge on Israel.
Abu Ahmed, a spokesman for Islamic Jihad’s military wing, said the group was prepared.
“The occupation will pay the price if they even think of carrying out an escalation in the Gaza Strip,” he told mourners.
On Saturday, Hamas’s military wing also reiterated their readiness to fight Israel.
“There is a truce in effect in the field. It is real if Israel stops its aggression and ends its siege. But if there is any Israeli aggression on the Gaza Strip we will respond strongly,” said a masked spokesman for the group, who identified himself as Abu Obeideh.
“We are completely ready to answer any Israeli aggression,” he said.
On Sunday morning, Israeli forces, backed by tanks and helicopter gunships, killed two Islamic Jihad militants, who were apparently trying to place a bomb along the Gaza border, the army and the militant group said.

“Soldiers opened fire on members of a terrorist cell which was trying to place an explosive charge in the immediate vicinity of the security barrier,” an Israeli army spokeswoman told AFP. The barrier separates Israel from the Gaza Strip.
Meanwhile, with peace talks stalled, the “entire world” could recognise a Palestinian state within a year, a dovish Israeli cabinet minister warned Sunday, urging the resumption of negotiations.
The comments from Industry and Trade Minister Benjamin Ben Eliezer come after Ecuador formally recognised Palestine as an independent state on Friday, following the lead of other South American countries.
Brazil, Argentina and Bolivia gave formal recognition earlier this month while Uruguay said it will do so early in the new year.
“I would not be surprised if within a year the entire world, even the US, recognizes a Palestinian state, then we will have to explain how this happened,” Ben Eliezer told reporters ahead of the weekly cabinet meeting.

Israel opposes any recognition of a Palestinian state, saying its establishment must be reached through negotiations and not through unilateral moves.
But with the breakdown of peace talks, the Palestinians have said they are considering new diplomatic options, and welcomed the recognition from the Latin American nations.
In Cairo, Secretary-General of the Arab League Amr Moussa welcomed Sunday Ecuador’s recognition of a Palestinian state on the pre-1967 borders.
Meanwhile, Israeli security staff were investigating a suspicious object that was found on Sunday in the office building of Prime Minister Benjamin Netanyahu, an official said.
“We are checking out a suspicious object that was found,” an official at Netanyahu’s office told AFP, without giving further details.
Public radio reported that the object was a bag and that it had been taken away for inspection.
It was not immediately clear if Netanyahu was in the complex at the time.
In another news, Israeli police on Sunday deployed across the flashpoint east Jerusalem district of Silwan after the city’s mayor raised the prospect of evictions at a Jewish building and an Arab home in the quarter.

Children in the mostly Arab neighbourhood threw stones but no major clashes were reported ahead of evictions that could come as early as Monday.
The affected buildings are a six-storey apartment block known as Beit Yonatan (House of Jonathan) and a former synagogue that is currently inhabited by an Arab family.
Israeli courts have issued eviction orders to the residents of both buildings but Mayor Nir Barkat said on Sunday he has tried to prevent the orders from being carried out.
In another incident, nine French activists were arrested on Sunday during a pro-Palestinian demonstration at a major Israeli checkpoint in the West Bank, police and protest organisers told AFP.
“Our forces today dispersed protesters who were throwing rocks at us and proceeded to arrest nine people, including some foreigners,” Micky Rosenfeld said.
“The protest took place at the Qalandia checkpoint, north of Jerusalem, and the police made arrests after the activists tried to cross the checkpoint,” he added.
A spokesman for the French EuroPalestine activist group said nine French citizens were arrested at the demonstration. A Palestinian detained at the protest was later released, he said