Two Israeli soldiers and a Hezbollah militiaman were killed on Tuesday as air raids and gun battles raged across the volatile Israel-Lebanon border.
And Lebanese anti-aircraft batteries opened up on Israeli warplanes that broke the sound barrier at low altitude over Beirut, after Hezbollah guns earlier shot at planes over the border, security sources said.
The violence, which drew calls for restraint from the US, erupted a day after a military commander of the fundamentalist Shiite Muslim Hezbollah movement was blown up in a Beirut car-bomb attack blamed on the Jewish state.
Lebanon said it was considering a protest to the UN over what it called "aggressions" by arch foe Israel, while Hezbollah warned it would avenge the killing of a second militant in two days.
Hezbollah chief Sheikh Hassan Nasrallah vowed to "cut the hand" of Israel after blaming it for the Monday bombing that killed Ghaleb Awwali, a member of the movement's military wing.
In Israel, army Captain Jacob Dallal said: "There was a deliberate attack by Hezbollah snipers on a Tshahal [army] position in the western area of the border. Two soldiers have been killed. The army has responded to the shooting."
Israeli combat helicopters fired eight rockets during three raids on Hezbollah "monitoring posts" on the outskirts of the border villages of Aita Shaab and Blatt, Hezbollah and police sources said.
And an Israeli tank opened fire on a Hezbollah post near Aita Shaab, killing one fighter, according to a statement by the movement's military arm, the Islamic Resistance.
Lebanese police said Israeli helicopters strafed the border region with machine gun fire under the cover of warplanes, which prompted Hezbollah anti-aircraft fire.
Lebanese Foreign Minister Jean Obeid told the country's UN envoy to hold consultations "on the possibility of calling a special Security Council meeting to condemn the Israeli aggressions," his ministry said.
US State Department spokesman Richard Boucher said: "As far as the situation on the border, we think the parties should exercise maximum restraint."
The US, he said, had spoken with representatives of the UN interim force in Lebanon in the region "and we're following events there closely."
As to claims Israel was behind Awwali's death, Boucher said there was no evidence to back the charges.
The Islamic Resistance said it "will choose the suitable time and place for a deterrent response that will make the enemy understand that any aggression against our people ... will be very costly."
Awwali was killed barely 24 hours earlier in an attack Hezbollah blamed on the Jewish state despite an alleged claim of responsibility by an underground Lebanese Sunni Muslim group.
The attack was carried out "either by Israeli hands that infiltrated into Lebanon with Euro-pean, American or other foreign passports, or at the hands of local Lebanese agents," Nasrallah said on Monday.
A statement by a Sunni Muslim group called Jund Ash Sham said the bombing was part of a plan to eradicate Shiite "heresy," but the group's leader later denied any involvement and blamed Israel's Mossad spy agency.
Israeli officials refused to make any comment, but one senior source said Israel "did not have that kind of reach or potency."
Lebanese President Emile La-houd called the assassination flagrant aggression by Israel, and Prime Minister Rafiq Hariri said he was confident the criminals would be arrested and given the punishment they deserved.
On Tuesday evening, Israeli fighter-bombers caused supersonic booms over Beirut, provoking panic on the streets of the capital.
"It is the first such supersonic bangs [over Beirut] in years, probably since the Israeli withdrawal" from southern Lebanon, a security source said.
In response, Lebanese anti-aircraft batteries opened fire at the planes south of the capital, a senior security source said.
The Israeli planes also caused two booms over the coastal town of Naameh, about 15km south of Beirut, witnesses said.
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