An ill-fated attempt to smooth over a dispute in Gaza's Palestinian Islamist movement was the real reason behind the salvo of mortars Hamas fired at Israel four-days-ago, triggering a flare-up of fighting, observers say.

If it was a ploy, it went badly wrong. Ten people have been killed in the cycle of violence, and some on both sides fear a new war could erupt unless it is contained.

On Thursday, Palestinian militants fired more rockets and Israel directed more air strikes at the enclave, as the spiral of armed exchanges showed no sign of abating.

Hamas and Israel are now intent on putting the lid back on. Both vow they will not back off in the face of aggression, but both have made clear they also do not want to see the cycle of attack and retaliation escalate into a major clash.

Israeli Prime Minister Benjamin Netanyahu warned that Israel would take action against groups that he said were testing the Jewish state's will to defend itself.

"Israel will act aggressively, responsibly and wisely to preserve the quiet and security that prevailed here over the past two years," he said on Wednesday evening.

A Hamas spokesman said his group was seeking to reverse the recent rise in violence "to protect stability and ... restore the conditions on the ground".

Most Gaza rockets inflict no more than material damage. But if one were to wipe out an Israeli family, war against Hamas would be all but unavoidable.

RESTRAINT

In the two years since Israel's major offensive killed 1,400 Gaza Palestinians, Hamas has tried to avoid another onslaught on its stronghold by reining in smaller Islamist militant factions, who nevertheless persist in firing rockets at Israel.

At the weekend, however, Hamas not only fired dozens of its own mortars at Israel but also took responsibility in public.

It told Palestinians it was retaliating for Israel's killing of two teenagers who tried to infiltrate last week, but also that it wanted to "spare our people a military confrontation".

Observers in Gaza say they believe Hamas had another motive, rooted in a split in its leadership over recent demands from the Palestinian street to reconcile with its arch rivals in the dominant Fatah movement, which favours peace with Israel.

Shunned by the West as a terrorist movement, Hamas does not recognise Israel and instils a duty of "armed resistance".

Its internal crisis erupted this month after tens of thousands of Palestinians held rallies to demand an end to the debilitating feud with Fatah that many believe is bleeding dry Palestinian aspirations of independence and statehood.

Speaking to the crowds, Hamas's leader in Gaza, Ismail Haniyeh, invited President Mahmoud Abbas of the rival Fatah movement for top-level reconciliation talks.

In what may have been an off-the-cuff rhetorical flourish, Haniyeh issued the invitation apparently without consulting Hamas's exiled leader Khaled Meshaal, who lives in the Syrian capital, Damascus.

There was no consensus in Hamas for Haniyeh's initiative, which prompted a sharp internal debate, according to political analyst Hani Habib and a Gaza academic specialising in Islamic movements, who prefers not to be named.

And if Haniyeh was only bluffing, Abbas surprised him and compounded the problem for Hamas by promptly accepting his invitation.

While Hamas could hardly reverse the invite, it was agreed after deliberations to create "security conditions" that would make an Abbas visit impossible, the analysts say.

But when other militant groups got into the act, according to the analysts, the scenario of a limited, controlled, and containable clash with Israel went off the rails and now risks going horribly wrong.

ISLAMIC JIHAD

Hamas forces seized full control of Gaza in 2007, ousting forces loyal to Abbas. The Palestinian national movement is now split geographically and ideologically, between the Islamists in their enclave and Fatah in the Israel-occupied West Bank.

Hamas is backed by Israel's enemies Iran and Syria. Israel says the Palestinian group has in the past been used as a proxy by Damascus and Tehran to stir up trouble.

But the Islamist movement has demonstrated that it can also be prudent about how it displays its resistance to Israel, rather than recklessly provoking its much more heavily armed enemy, as some smaller militant groups in Gaza are ready to do.

It had calculated that firing into empty Israeli land would raise tensions just enough to sideline the reconciliation issue without risking heavy Israeli retaliation, Habib said.

"When all of a sudden Hamas violates its two years of calm and claims the firing of rockets, that did not fool anyone in Gaza. People knew Hamas wanted this to cover up for its internal crisis," he said.

"It was also clear Hamas attacks were aimed at vacant areas in order not to draw a harsh Israeli response," said the Islamist expert.

But when another group joined in, the calculations went wrong.

"The Islamic Jihad saw a window in Hamas's firing to carry out its own attacks," Habib explained. But instead of hitting empty ground with mortars, this group shot long-range rockets into the cities of Ashdod and Beersheba.

In the retaliatory Israeli air strikes that followed, five Islamic Jihad militants were killed, in addition to four Gaza civilians mistakenly killed in Israeli military action earlier.

And in Jerusalem on Wednesday, bad memories of the 2000-2005 Palestinian uprising were revived, when a woman was killed and dozens of Israelis injured by a bomb near the bus terminal.