Gaza humanitarian ceasefire largely holds, Israel moots full truce

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By Nidal al-Mughrabi and Jeffrey Heller

GAZA/JERUSALEM (Reuters) - Israeli leaders on Thursday played down prospects of a permanent Gaza ceasefire and fighting returned to a familiar pattern of Palestinian rocket salvoes and Israeli bombing after a five-hour humanitarian truce.

An Israeli official said earlier that senior Israeli negotiators in Cairo had approved a full truce, but a final decision lay with the security cabinet.

But Foreign Minister Avigdor Lieberman, who has been advocating a move into Gaza to stop rockets being fired on Israel, said: "We are not familiar with the matter."

A Hamas spokesman also denied initial comments by the Israeli official that a full truce was slated to start at 6 a.m. (0300 GMT) on Friday.

Naftali Bennett, Israel's hawkish economy minister, said time was running out for Hamas, the Islamist group dominant in Gaza.

"We are moving from Iron Dome to an iron fist," Naftali said, referring to an anti-missile system that has intercepted many of the rockets in 10 days of warfare.

With large contingents of Israeli infantry and tanks deployed near the Gaza border, Bennett, a member of the decision-making security cabinet, appeared to amplify Israeli threats of a ground invasion of the densely-populated enclave.

"I want to wish good luck to the IDF (Israel Defence Forces) soldiers. With the IDF's help, and God's help, we will win," he told reporters in the southern city of Ashkelon, a frequent target of rocket strikes.

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A Palestinian woman holds her baby as she waits to withdraw cash from an ATM machine outside a bank …

Sirens sounded in southern Israel at the end of the five-hour ceasefire requested by the United Nations.

The military said rockets headed toward Tel Aviv, the southern city of Beersheba and Ashkelon. There were no reports of casualties or damage.

Israeli aircraft bombed a house in Gaza City, killing three children, and another two youngsters died in separate attacks, said Ashraf Al-Qidra, spokesman of the Gaza health ministry. The Palestinian death toll rose to 229, mostly civilians, according to the ministry.

In Israel, one civilian has been killed by fire from Gaza, where the Israeli military says more than 1,300 rockets have been launched into the Jewish state. The salvoes have made a race to shelters a daily routine for hundreds of thousands of people.

Hours before the humanitarian ceasefire began, about a dozen Palestinian fighters tunnelled under the border, emerging near an Israeli community. At least one was killed when Israeli aircraft bombed the group, the military said.

CEASEFIRE EFFORTS

President Barack Obama said on Wednesday he supported Egyptian efforts to agree a ceasefire that would end the worst flare-up of Israeli-Palestinian hostilities in two years. U.S. officials would use their diplomatic resources over the next 24 hours to pursue closing a deal, he said.

Egypt had proposed a permanent ceasefire plan on Tuesday, which Israel accepted. But Hamas, saying its terms had been ignored, rejected it.

Hamas wants Israel and Egypt, whose military-backed government is at odds with the Islamist group, to lift border restrictions that have deepened economic hardship among Gaza's 1.8 million populace and caused a cash crunch in the movement, which has been unable to pay its employees for months.

The United Nations Relief and Works Agency for Palestinian refugees (UNRWA) said it had discovered on Wednesday some 20 rockets hidden in an empty Gaza school.

"UNRWA strongly condemns the group or groups responsible for placing the weapons in one of its installations. This is a flagrant violation of the inviolability of its premises under international law," an UNRWA statement said.

Israel has long accused Palestinian militants of storing weapons in civilian facilities and using Gaza residents as human shields by launching rockets from residential areas.

On Wednesday, an Israeli gunboat off Gaza's Mediterranean coast shelled a beach, killing four boys - two aged 10 and the others 9 and 11 - from one family and critically wounding another youngster, witnesses and Ashraf al-Qidra of the Gaza Health Ministry said.

The Israeli military said the reported civilian casualties were unintended and tragic and it was investigating what happened. "Based on preliminary results, the target of this strike was Hamas terrorist operatives," it said in a statement.

The current conflict was largely triggered by the killing of three Israeli teens in the occupied West Bank last month and the death on July 2 of a Palestinian youth in a suspected revenge murder.

Israel indicted on Thursday three Israelis suspected of having killed the 16-year-old Palestinian in Jerusalem. A lawyer for a legal aide group representing the adult and two minors said they would enter a plea at a later date.

(Additional reporting by Dan Williams and Maayan Lubell in Jerusalem, Writing by Jeffrey Heller Editing by Jeremy Gaunt)

Putin: US sanctions hurt bilateral ties, US firms

MOSCOW (AP) — President Vladimir Putin on Thursday lamented the latest round of U.S. sanctions against Russia, saying they will stalemate bilateral relations and hurt not only Russian but also American businesses.

Russia's benchmark MICEX was down 2.9 percent in late afternoon trading Thursday upon news of the sanctions while Russia's biggest oil company, Rosneft, was nearly 5 percent down and second-largest oil producer was trading 9 percent lower.

Putin's comments came hours after President Barack Obama announced broader sanctions against Russia, targeting two major energy firms including Rosneft, a pair of powerful financial institutions, eight weapons firms and four individuals. The increased U.S. economic pressure is designed to end the insurgency in eastern Ukraine that is widely believed to be backed by the Kremlin.

The U.S. penalties, however, stopped short of the most stringent actions the West has threatened, which would fully cut off key sectors of Russia's oil-dependent economy. But officials said those steps were still on the table if Russia fails to abide by the West's demands to stop its support for the pro-Russia insurgents who have destabilized eastern Ukraine.

The insurgents have been fighting government troops in eastern Ukraine for four months now in a conflict that the U.N. says has killed over 400 people and has displaced tens of thousands. The conflict took off shortly after Russia annexed the mostly Russian-speaking Ukrainian peninsula of Crimea.

In televised comments Thursday, Putin said the sanctions are "driving into a corner" relations between the two nations as well as the interests of American companies and "the long-term national interests of the U.S. government and people."

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Russia's President Vladimir Putin motions to blow a kiss to journalists as he leaves the Itamara …

Putin warned Washington that the sanctions will backlash against American companies working in Russia.

The most noticeable companies on the list are Rosneft and Russia's largest independent gas producer, Novatek. Both are now barred from getting long-term loans from U.S. entities.

Moscow-based investment bank Sberbank-CIB said in a note to investors that Russian companies cannot replace long-term loans from the U.S. immediately.

"While Asian and Middle Eastern money can step in to fill the gap, we expect that this will take time," the note said, adding that borrowing will also cost more.

Rosneft has a multibillion-dollar deal with ExxonMobil, which among other things allowed Exxon to develop lucrative oil fields in Russia.

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Igor Chernetsov whose wife was killed in collapsed building during airstrike gestures near his house …

"We gave this American company the right to work on the shelf," Putin said in Brazil, referring to Exxon's potential exploration on the Russian Arctic shelf. "So, what, the United States does not want it to work there now?"

Russia's foreign ministry dismissed the sanctions "bullying" and signaled that it was ready to push back.

"We consider the new round of American sanctions against Russia as a primitive attempt to take vengeance for the fact that events in Ukraine are not playing out to the tune of the script of Washington," the ministry said in a statement.

Prime Minister Dmitry Medvedev in televised remarks said the sanctions are throwing Russia's relations with the West "back to the 1980s" and added that Russia "will have to pay more attention to military and security spending."

Putin made no mention of the additional sanctions levied Wednesday by the 28-nation European Union, which urged the European Investment Bank to sign no new financing agreements with Moscow and was suspending operations in Russia financed by the European Bank for Reconstruction and Development. European nations have much closer energy and other economic ties with Russia and have not imposed as tough sanctions as the United States.

But the foreign ministry did lash out at the EU's new sanctions, accusing Europe of "giving in to the bullying of the U.S. administration."

In Moscow, the Association of European Businesses on Thursday expressed its "strong disagreement" with the new U.S. sanctions, saying "these companies and banks are reliable and long-term partners of many European companies," and said the curtailing of the activities of the EBRD and the EIB in Russia might "affect the general reliability of these two institutions in other markets."

Igor Sechin, Rosneft's CEO and a close confidante of Putin, dismissed the U.S. sanctions as "unfounded, subjective and unlawful," adding that his company "had no role in the events in Ukraine."

Sechin said their lawyers have to yet to explore how hurtful the sanctions could be but added that the company has enough money in reserves to refrain from taking out new loans for a while.

Rosneft posted $2.5 billion in net profit in the first quarter of the year and about $3.5 billion in free cash flow.

"This is the wrong way," Sechin said, referring to the sanctions, in comments carried by Interfax. "But I think God sees everything and will put things right."

Putin: American sanctions won't hurt just Russia

Russia's president says the move over Ukraine intervention will sour relations between the superpowers.
Moscow markets tumble

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Ukraine says military plane likely shot down by Russia

By Richard Balmforth

KIEV (Reuters) - Russian jets shot down a Ukrainian SU-25 fighter plane that was on military operations over the east of Ukraine, where government forces are fighting to quell a pro-Russian separatist rebellion, the Ukrainian military said on Thursday.

It was the first time Ukraine had directly accused Russia of using air power in the war. In a previous attack on a military transporter, which it said was launched from Russia, Kiev was unable to specify whether it came from landbased missiles or airborne.

Russia's defence ministry declined to comment on Thursday's accusation by Kiev.

The Ukrainian Defence Ministry said the plane was brought down on Wednesday night near Amvrosiyivka, about 15 km (about 9 milles) from the border with Russia, by rockets which hit it in the tail as it wheeled away from the border.

"It is likely that this was carried out by air-to-air rockets from the Russian airforce which were patrolling the border in a pair," the ministry said in a statement on its website.

The pilot safely ejected, Andriy Lysenko, a spokesman for the National Defence and Security Council, told journalists.

The downing of the SU-25 came against a background of increasingly strident charges of direct Russian involvement in the three and a half month conflict in which the pro-Western government in Kiev is fighting to put down a rebellion by separatists who want a future in Russia.

Moscow denies orchestrating the rebellion. But Western governments accuse it of failing to do enough to help curb the violence. U.S. President Barack Obama imposed sanctions on Wednesday on some of Russia's biggest companies, limiting their access to funding.

"VERY TOUGH"

"The situation on the border in the zone of the 'anti-terrorist operation' is still very tough. Grad missile systems, heavy artillery and mortar is continually being used. The firing on the border posts and (government) forces is often coming from the territory of the Russian Federation," Lysenko said.

Five Ukrainian servicemen had been killed in the past 24 hours, he said. This would bring to more than 270 the number killed since the government launched an "anti-terrorist" operation in April to crush the rebels.

Hundreds of civilians and rebels have also been killed.

Ukrainian positions had come under fire from artillery from the Russian border settlement of Kuybyshevo, Lysenko said, adding that more and more Russian units were coming up to the border with Ukraine.

A Ukrainian paratroop tactical group deployed at Dmytrivka in particular had come under heavy fire from the Russian side, he said.

In the past 24 hours, the separatists had carried out 27 attacks on army checkpoints and positions of government forces, Lysenko said.

Attack planes are one of the Ukrainian military's most effective weapons for inflicting heavy losses on concentrations of rebels and military equipment which Kiev says is being brought in from Russia to fortify rebel positions.

The shooting down of the SU-25 was the third reported incident this week in which a Ukrainian plane has been hit by a missile.

Kiev has said that an An-26 military transporter was brought down last Monday probably by a missile fired from Russia, either from the air or from the ground. Two out of the eight people on board that plane were killed, the Ukrainian military said.

On Wednesday, another SU-25 was hit by a rebel missile but the pilot landed the plane successfully with relatively slight damage. Kiev did not allege Russian involvement in that case.

The rebellions erupted in Ukraine's Russian-speaking eastern regions after months of pro-Europe protests drove out a Moscow-backed president. Russia subsequently annexed Ukraine's Crimea, sparking the biggest Russia-West crisis since the end of the Cold War.

Ukrainian President Petro Poroshenko refused to renew a 10-day unilateral ceasefire by government forces on June 30, saying it had been repeatedly breached by the separatists and had cost Ukrainian lives. Efforts to forge another more effective truce have failed.

(Additional reporting by Natalya Zinets in Kiev and Tatyana Ustinova in Moscow; Writing by Richard Balmforth)

Israeli PM orders ground offensive in Gaza: official statement

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Israel launches 'ground phase' in Gaza battle

JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu on Thursday instructed the military to begin a ground offensive in Gaza, an official statement from his office said.

Reuters witnesses and Gaza residents reported heavy artillery and naval shelling and helicopter fire along the Gaza border.

"The prime minister and defence minister have instructed the IDF to begin a ground operation tonight in order to hit the terror tunnels from Gaza into Israel," the statement said.

Israel and Palestinian militants in the densely populated enclave have been fighting a cross border war for the ten days.

The Israeli military says Gaza militants have fired more than 1,300 rockets into Israel, and Palestinian health officials say 233 Palestinians have been killed in Israeli air and naval strikes. One Israeli civilian has been killed by fire from Gaza.

A statement from the Israeli military said the operation will include "infantry, armoured corps, engineer corps, artillery and intelligence combined with aerial and naval support."

Before dawn on Thursday, about a dozen Palestinian fighters tunnelled under the border, emerging near an Israeli community. At least one was killed when Israeli aircraft bombed the group, the military said.

(Writing by Maayan Lubell; Editing by Louise Ireland)

The Israeli military is targeting "terror tunnels from Gaza into Israel," according to an official statement.
Reports of heavy artillery

U.S. official confirms Flight MH17 shot down, but origin of missile unknown; Obama says White House working to determine if any Americans were aboard

U.S. officials have confirmed to several media outlets that the Malaysia Airlines passenger plane that crashed near the Ukraine-Russia border Thursday was shot down by a surface-to-air missile.

The origin of the missile remained unclear and both government officials and pro-Russia separatists fighting in the region denied responsibility.

The number of fatalities in the crash was not immediately clear.

There were 295 people on board, 280 passengers and 15 crew members. Ukrainian authorities told U.S. Embassy officials that everyone on the plane was "believed dead" and that the aircraft debris was scatted over a 10-mile swath of land, ABC News reported.

Malaysia Airlines released a partial list, published by the Washington Post, of the nationalities for 233 of the plane's 280 passengers: 154 Dutch, 27 Australian, 23 Malaysian, 11 Indonesian, 6 British, 4 German, 4 Belgian, 3 Filipino and one Canadian. The airline said it did not yet know the nationalities of the remaining passengers yet. Every member of the 15-person crew was Malaysian, the airline said.

An aide to Ukraine's interior minister quoted by Interfax said the total number of dead in the crash was more than 300 and included 23 U.S. citizens.

[Related: Biden: 'Apparently' Malaysian plane ‘shot down … blown out of the sky' for post-PUB CE]

President Barack Obama called the crash a "terrible tragedy" and said the White House was working to determine whether there were U.S. citizens aboard the plane.

Speaking at a conference in Detroit, Vice President Joe Biden also commented on the crash, saying the aircraft "apparently had been shot down. Shot down. Not an accident. Blown out of the sky.

“We have seen reports that there may have been American citizens on board and obviously that’s our first concern," he said. "We’re now working every minute to confirm those reports as I speak. This is truly a grave situation.”

In an interview with Charlie Rose, former Secretary of State Hillary Clinton said, "there does seems to be some growing awareness that it had to be Russian insurgents. How we determine that will require some forensics. But then if there is evidence pointing in that direction, the equipment had to come from Russia."

Clinton said if there is evidence linking Russia to the attack, "that should inspire the Europeans to do much more" to support Ukraine.

Meanwhile, the head of Ukraine's emergency services told Reuters that search efforts at the scene of the crash were being hampered by "armed terrorists."

Crash Scene Eyewitness: 'Bodies Scattered Everywhere'

Anton Gerashenko, an adviser to Ukraine's interior minister, wrote on Facebook soon after the crash that the plane was flying at an altitude of 33,000 feet when it was hit by a missile fired from a Buk launcher.

Separatist leader Andrei Purgin told the AP that he believed Ukrainian troops had shot the plane down, but did not say why he was certain. Witnesses quoted by Russian media outlets said they saw a plane being hit by what they thought was a rocket, according to the news service.

Ukrainian President Petro Poroshenko said Ukraine's military was not responsible for the reported attack, which he called an “act of terror."

"We do not exclude that this plane was shot down, and we stress that the Armed Forces of Ukraine did not take action against any airborne targets," Poroshenko said. "We are sure that those who are guilty in this tragedy will be held responsible."

Malaysian Airlines earlier tweeted that it lost contact with Flight MH17 over Ukrainian airspace:

Malaysia Airlines ✔ @MAS Follow Malaysia Airlines has lost contact of MH17 from Amsterdam. The last known position was over Ukrainian airspace. More details to follow. 10:36 AM - 17 Jul 2014 71,464 RETWEETS 9,219 FAVORITES

The airline later confirmed the crash, approximately 25 miles from the Russia-Ukraine border:

Flight MH17 operated on a Boeing 777 departed Amsterdam at 12.15pm (Amsterdam local time) and was estimated to arrive at Kuala Lumpur International Airport at 6.10 am (Malaysia local time) the next day. The flight was carrying 280 passengers and 15 crew onboard.

The plane crashed near a village called Hrabov in the Donetsk region, an area that has seen clashes between Ukrainian forces and pro-Russia separatist rebels in recent days.

On Wednesday evening, a Ukrainian fighter jet was shot down by a Russian plane, Ukrainian authorities told the AP.

[Related: Planes rerouted after Malaysia Airlines crash: What you need to know]

Prior to Thursday's crash, the U.S. Federal Aviation Administration, along with several other countries, had warned pilots not to fly over parts of Ukraine.

Missile downed Malaysian plane, U.S. says

A Malaysia Airlines passenger jet carrying 295 people crashed near the Ukraine-Russia border.
Partial list of nationalities