The rubble of dozens of homes razed this week by Israeli army bulldozers lined streets marred with huge craters in the town and its adjoining refugee camp, located near the border with Egypt.

Israeli forces abandoned the Tal al-Sultan neighborhood of Rafah, where they used tanks and helicopters to disperse a protest on Wednesday against their "Operation Rainbow", killing 10 Palestinians, including children.

A tank and a bulldozer remained at the edge of the neighborhood, blocking all access.

Meanwhile, eight more Palestinians were killed Thursday as Israeli forces pushed on with an unprecedented raid in southern Gaza despite censure from the United Nations and criticism from Washington and London.

Among those killed was Khalid Abu Anza, 37, the local head of the armed wing of the radical movement Hamas, who died in a morning air strike.

Palestinian anger was further inflamed when an Israeli court convicted Fatah leader Marwan Barghuti, the man seen as the inspiration behind the intifada, for a series of murders.

Five of the victims were killed in overnight air strikes in the Jenaina neighbourhood of Rafah and the Brazil quarter of the neighbouring refugee camp.

Two others were shot by troops in the neighbourhood of Tal al-Sultan.

Their deaths brought to 42 the number of people killed since the start of Operation Rainbow early Tuesday.

An Israeli army spokesman said the operation, launched early Tuesday to stamp out cross-border weapons smuggling and arrest wanted militants, was continuing and that the troop withdrawal was merely a "redeployment."

He said soldiers were still searching for tunnels believed to be used to smuggle weapons from Egypt into the Gaza Strip, but acknowledged that no new tunnel had been discovered since the launch of the raid.

Eleven such tunnels have been destroyed since the beginning of this year, the spokesman said.

In the Salam and Brazil neighborhoods of Rafah, only a few tanks and armored vehicles were still in position early Friday, although a curfew remained in effect.

Armored vehicles fired sporadically at Palestinian youths throwing stones, according to an AFP correspondent on the scene.

Israeli military sources said infantry units that had been deployed Thursday in the two areas had been pulled out.

Meanwhile, nearly 1,000 Israelis yesterday marched on a Gaza Strip checkpoint to demand an end to the Israeli army's deadly raid in Rafah and a full withdrawal from the territory, an AFP photographer reported.

Demonstrators marched two kilometers (one mile) to the Kissufim border crossing between Israel and the Gaza Strip, yelling "No to War Crimes" and "No to the occupation".

The protest was organized by several pacifist groups and army reservists who have refused to serve in the Palestinian territories.