A Palestinian rocket slammed into a street in this southern Israeli town Wednesday, killing two preschool children playing in a yard as Israelis ushered in the fall harvest festival of Sukkot.
Prime Minister Ariel Sharon phoned Sderot Mayor Eli Moyal and told him that "Israel will respond" to the attack, a government official said.
The rocket attack came in defiance of a major Israeli raid into the nearby Gaza Strip aimed at rooting out militants behind an unending wave of rocket attacks in recent weeks. The raid, which began late Tuesday, killed four Palestinians and wounded 46, Palestinian hospital officials said.
In response to the Sderot attack, Israeli security officials said they would broaden the operation in northern Gaza; an Israeli helicopter strike near a Gaza refugee camp killed one Palestinian militant and wounded another. Two armed Palestinians died while fighting advancing Israelis in Jebaliya, medics said.
Elsewhere in the West Bank and Gaza Strip, seven Palestinians, including a 14-year-old boy, were killed by Israeli army fire.
The rocket slammed into a quiet street early Wednesday evening, just as Sukkot was beginning.
The blast blew out the windows of a house, showered a minibus with shrapnel and killed two children of Ethiopian descent. Dorit Benesay, 2, and Yuval Abeva, 4, were playing under an olive tree outside Yuval's grandmother's house when the rocket struck, emergency workers and neighbors said.
The homemade Qassam rocket was the 30th to hit Israeli communities in the past month and the 14th to hit Sderot in that time, according to the Israeli army.
The Islamic group Hamas claimed responsibility for the rocket attack on its Web site, and the group said it would not abandon the rocket attacks.
The violence highlighted the failure so far of Israel's increasingly intense efforts against militants firing the rockets from Gaza. The militants have been intensifying anti-Israel attacks ahead of the Jewish state's announced pullout from Gaza scheduled for next year.
Late Wednesday, dozens of Palestinian gunmen were seen taking up positions near the Jebaliya refugee camp.