Israeli troops clashed with Palestinian militants in fierce, prolonged street battles across Gaza City on Wednesday, killing eight Palestinians.

The deaths -- and subsequent demands for reprisals at angry funeral processions -- complicated modest moves toward reviving the U.S.-backed "road map" peace plan and threatened another escalation in more than three years of Palestinian-Israeli violence.

Mourners stand over the bodies of six Palestinians killed in the clashes.  [AP]

Palestinian leaders complained the fighting frustrated the first high-level U.S. diplomatic mission in a month, by envoys John Wolf and David Satterfield. They met with Palestinian Prime Minister Ahmed Qorei in the West Bank city of Ramallah in a bid to revive long-stalled peace efforts.

The fighting began near the isolated Jewish settlement of Netzarim. The Israeli army said militants fired anti-tank missiles and set off a bomb, prompting the troops to fire back. Two Palestinians were killed in that first skirmish, said Dr. Moawia Hassanein, a Palestinian hospital official.

The army then entered a Gaza City neighborhood near Netzarim, and a fierce battle began. Six other Palestinians were killed and several were wounded, Hassanein said.

During the long battle with an unusually large force of as many as 200 Palestinian gunmen, Israeli tanks crushed some parked cars.

Palestinian paramedics tended to the wounded and militants with rocket launchers scrambled through the streets. A group of boys took cover behind a tin shack as gunfire crackled.

At least five of the dead were armed men, including four from the Islamic Jihad group and one from Hamas. Both groups are on the U.S. State Department's list of terrorist organizations.

Three of the victims were believed to be bystanders, hospital officials said. Israel's military said no soldiers were hurt and said all the Palestinian dead were armed.

Anger at funerals

Later Wednesday, thousands of Palestinians jammed the streets of Gaza to mourn the dead. Some fired weapons in the air, and women watched from balconies as the bodies, wrapped tightly in flags of Islamic groups, were hoisted above the crowd on stretchers.

Mourners stand over the bodies of six Palestinians killed in the clashes.

Islamic Jihad vowed to avenge the killing of its gunmen. Hamas said the "aggression is a greeting and a reception for the American delegation."

Wolf and Satterfield urged Qorei to meet soon with Israeli Prime Minister Ariel Sharon. Qorei has balked at a summit until he gets assurances it will produce results. Also, he was hoping to present Sharon with a Palestinian agreement for a truce, but he has been unable to secure a deal.

"We told them, 'OK, help in the preparation for the meeting,"' Qorei told reporters afterward. "If there is a successful meeting, a meeting with good indications for our people, we are ready."

The United States has promoted the road map, which envisions the formation of a Palestinian state in 2005.

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