(Adds Hamas comment, paragraphs 4-5, 8)

By Jeffrey Heller

JERUSALEM, June 3 (Reuters) - Prime Minister Ehud Olmert said on Sunday that Israel's attacks against militants in the Gaza Strip had led to a drop in rocket strikes from the territory and they would continue.

Minutes after his remarks were broadcast on Israel Radio, the armed wing of the Islamist Hamas group said it fired eight mortar bombs from Gaza. An Israeli army spokesman said three hit the Erez border crossing, wounding four soldiers.

"Given what appears to be a reduction in the number of Qassam (rocket) launches, I would like to make clear that we are not conducting negotiations. We are not committing to any change in our operational tactics," Olmert told his cabinet.

Sami Abu Zuhri, a Hamas official, described the mortar bomb attack as a blow to Olmert's credibility.

"Olmert is telling lies in a hopeless attempt to sell a false victory against Palestinian resistance," Abu Zuhri said.

Palestinian President Mahmoud Abbas of Fatah has proposed a ceasefire under which Hamas and other militant groups would halt rocket attacks from Gaza and Israel would stop air strikes against them.

According to the plan, which Hamas -- Abbas's partner in a unity government -- and Israel have publicly rebuffed, the truce would be extended to the occupied West Bank within a month.

Abu Zuhri said Egyptian-mediated talks with Hamas and Fatah in Cairo were continuing and both factions were discussing the proposal and preparing position papers outlining how best to avoid a resumption of recent fierce internal fighting.

Abbas said he would hold talks with Olmert on June 7. Olmert's office said the meeting was likely to take place in the West Bank city of Jericho.

Olmert will meet U.S. President George W. Bush in Washington on June 19 to discuss how to revive peacemaking clouded by the current bloodshed.

ISRAELI OPERATIONS

"Operations (against militants) are bringing results and will continue as long as they continue to contribute to the preservation of (our) security interests," Olmert said at the start of the weekly cabinet session.

The pace of the rocket attacks has slowed over the past week amid Israeli air strikes that have targeted Hamas facilities, commanders and rocket crews.

Hamas and other militant groups have fired some 285 rockets from Gaza, killing two Israelis, since a surge of violence began on May 15, the Israeli military said.

Israeli air strikes have killed nearly 50 Palestinians, most of them fighters. Israel has also carried out limited ground operations in the Gaza Strip.

In West Bank violence, Israeli soldiers killed a Palestinian gunman in Jenin refugee camp, witnesses and military officials said.

On Saturday, Israeli undercover forces killed a Palestinian shopkeeper and wounded his brother during an apparent attempt to shoot two gunmen in the West Bank town of Nablus, Palestinian security officials said. An Israeli military spokeswoman said Israeli forces shot at a gunman.

Israel has rejected the idea of a West Bank ceasefire, saying its operations there were necessary to stop militant attacks. In rejecting calls for a truce limited to Gaza, Israel has said Hamas would use a lull to rearm.

(Additional reporting by Nidal al-Mughrabi in Gaza, Wael al-Ahmad in Jenin and Atef Sa'ad in Nablus)

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