Hamas claims Gaza 'victory' as troops pull back

"The invaders fled and the army of Jews was defeated," said a Hamas chant that rang out from loudspeakers in Gaza City, where several thousand supporters of the group took to the streets in celebration and took festive photographs with gunmen.

Israeli Vice Premier Haim Ramon said the five-day-long operation had run its course and the "dozens of deaths among the Hamas terrorists" would serve as a deterrent to further rocket fire.

A senior Israeli government official said there would be a "two-day interval" for a visit by US Secretary of State Condoleezza Rice.

Rice is to hold talks in Jerusalem and the West Bank city of Ramallah tomorrow and Wednesday on moving Israeli-Palestinian peace negotiations forward. Washington hopes a Palestinian statehood deal can be reached this year.

Israel's security cabinet plans to meet on Wednesday to consider the government's next move. On Sunday, Israel's Defence Minister Ehud Barak said his country would press on with the offensive against Hamas in Gaza.

"This very limited (Gaza) operation was intended to show Hamas what could happen, what you may call a 'prequel'," the senior Israeli official said.

"If they decide they've seen enough and stop the rockets, if they get the message, then we may get into a period of quiet. If they continue to fire the rockets, then there will be more operations like this one or worse," the official said.