Israel, Hezbollah trade fire across Lebanon border amid alarm over Gaza war spillover

JERUSALEM/BEIRUT/CHANIA, Greece, Jan 6 (Reuters) - Air raid sirens sounded across northern Israel on Saturday as Lebanon's Iranian-backed Hezbollah group said it fired rockets at Israel, and Israel said it struck a "terrorist cell" in retaliation, as top U.S. and EU diplomats visited the region seeking to keep the war from spreading.

Fighting raged on inside Gaza, especially in and near the southern city of Khan Younis, where the Israeli military said it had killed three members of the militant Palestinian Hamas group that rules the densely populated coastal strip.

U.S. Secretary of State Antony Blinken and the European Union's top diplomat, Josep Borrell, were on separate trips to the region to try to quell spillover from the three-month-old war into Lebanon, the Israeli-occupied West Bank and Red Sea shipping lanes.

Israel and Hezbollah often trade fire across the Lebanese border, the West Bank is seething with anger, and the Iran-aligned Houthis in Yemen seem determined to continue attacks on Red Sea shipping until Israel stops bombarding Palestinians in Gaza.

"We have an intense focus on preventing this conflict from spreading," Blinken told reporters in Chania, Greece, on what is his fourth trip to the region since Oct. 7.

He said he would spend the next few days discussing with allies and partners how they can use their influence, including on ways to protect civilians and maximize humanitarian aid. The fighting has displaced most of Gaza's 2.3 million population and caused acute shortages of food, water, and medicines.

The Israeli military said it had identified some 40 "launches" from Lebanon toward the area surrounding the town of Meron in northern Israel. The sirens sounded, but there were no reports of casualties or damage.

Hezbollah said it hit a key Israeli observation post with 62 rockets as a "preliminary response" to the killing of Hamas' deputy chief Saleh al-Arouri on Tuesday.

Arouri was killed by a drone in the southern suburbs of Beirut, a stronghold of Hamas' Lebanese ally Hezbollah, in an attack widely attributed to Israel.

Lebanese Islamist militant group Jama'a Islamiya said it had fired two volleys of rockets at Kiryat Shmona in northern Israel, the third operation it has claimed since the Israel-Hamas war erupted on Oct. 7.

Israel's military said it responded to the rocket attacks with a drone strike on "the terrorist cell responsible for the launches."

It said it had also struck several Hezbollah targets in southern Lebanon, including military sites and "terrorist infrastructure." Hezbollah said five of its fighters had been killed in Israeli strikes.

Israel's onslaught began after Hamas militants from Gaza attacked Israel on Oct. 7, killing 1,200 people and taking 240 hostage, according to Israeli officials.

The offensive, aimed at wiping out Hamas, had killed 22,722 people by Saturday, according to Palestinian health officials, and devastated the tiny enclave. At least 122 Palestinians were killed and 256 others injured in Gaza in the space of 24 hours, health officials said.

Israeli Prime Minister Benjamin Netanyahu said in a short video statement that Israel must not stop its war on Hamas until all its goal are achieved, including destroying Hamas, the return of all hostages and ensuring Gaza no longer poses a threat to Israel.

Blinken met the leaders of Turkey and Greece on Saturday at the start of a week-long trip that will also take him to Israel, the Israeli-occupied West Bank, Jordan, Qatar, the United Arab Emirates, Saudi Arabia and Egypt.

In Istanbul, Blinken held talks with Turkish Foreign Minister Hakan Fidan and then President Tayyip Erdogan, a fierce critic of Israel's military actions in Gaza. Turkey, which unlike most of its NATO allies does not class Hamas as a terrorist organization, has offered to mediate.

The EU's Borrell expressed alarm in Beirut about exchanges of fire between Israel and Hezbollah and the risk that Lebanon could be dragged into the Gaza conflict.

"Diplomatic channels have to stay open. War is not the only option – it's the worst option," Borrell said.

There were reports of multiple deaths in Palestinian territories. The Palestinian Red Crescent reported heavy shelling near the Al-Amal Hospital in Khan Younis. Shrapnel flew into the medical facility amid the sound of gunfire from drones, it said in a post on social media.

The Israeli military said its commandos had killed several militants and found military equipment used by Hamas.

Most residents of Gaza have been displaced at least once by the bombardment.

Standing outside a morgue in Khan Younis, 11-year-old Mahmoud Awad said his parents and siblings had been killed by Israeli airstrikes.

"We were in al-Shati refugee camp and they dropped fliers saying Gaza is a battlefield, so we fled to Khan Younis because it was a safe place, and they still bombed us," he said.

Israel denies targeting civilians and says Hamas militants deliberately embed themselves among civilian populations. Hamas, which is backed by Iran and is sworn to Israel's destruction, denies that.