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GAZA, Friday (Reuters) Palestinian militants pronounced their seven-week-old truce dead and Washington tried to breathe life into a floundering peace plan after Israel killed a top Hamas political leader in response to a suicide bombing.

Adding to the powder keg atmosphere, about 10 Israeli tanks and armoured personnel carriers rolled into Jenin late on Thursday in a sweep for militants after a three-hour operation in the West Bank city earlier in the day, witnesses said.

Hamas lobbed more than a dozen mortar bombs at Jewish settlements in the Gaza Strip and one of its makeshift Qassam rockets hit a house in Sderot, a town in southern Israel, but there were no reports of casualties.

The fundamentalist Islamic group called the attacks an initial response to an Israeli helicopter missile strike in Gaza that killed Ismail Abu Shanab, a U.S.-educated engineer who was second in Hamas only to its founder Sheikh Ahmed Yassin.

"We urge all our cells of fighters in Palestine to strike in every corner of the Jewish state," Hamas's armed wing, the Izz el-Deen al-Qassam Brigades, said in a statement.

Faced with the prospect that a U.S.-backed "road map" peace plan could collapse under the weight of new violence, Secretary of State Colin Powell turned for help to Yasser Arafat, the Palestinian president whom Washington has tried to sideline.

"(I) call on Chairman Arafat to work with (Palestinian) Prime Minister (Mahmoud) Abbas and to make available to...Abbas those security elements that are under his control so that they can allow progress to be made on the road map - end terror, end this violence," Powell said at the United Nations.

Israel decided to return to tougher military action against militants after a Hamas suicide bomber blew himself up on a Jerusalem bus on Tuesday, killing 20 people. Hamas claimed the bus bombing as retribution for the killing of members of the group and said at the time it viewed the ceasefire as intact.

Abu Shanab died with two bodyguards when five missiles fired by helicopter gunships shattered his car as it drove through Gaza City, witnesses said. Fourteen passersby were wounded. A senior figure in Hamas's political wing, Abu Shanab was regarded by Palestinians and independent analysts as a moderate in the militant group.

Thousands of Palestinians marched in rallies across the Gaza Strip to protest against the killing, and large crowds were expected to take part in Abu Shanab's funeral procession on Friday.

A senior Hamas spokesman, Ismail Haniyah, said the Gaza attack freed the group from its commitment to observe the unilateral truce. "Hamas will hit Sharon like an earthquake," blared a loudspeaker at one Gaza rally on Thursday.

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