(Adds Hamas vows revenge)

By Nidal al-Mughrabi

GAZA, Oct 14 (Reuters) - Israeli troops killed eight Palestinian gunmen in clashes in the Gaza Strip on Saturday, including seven from the militant group Hamas, amid a surge in violence in the coastal territory.

In the past three days, 21 Palestinians have been killed in fighting in Gaza, the majority of them militants, and two dozen have been wounded.

Since Israel stepped up its offensive in Gaza after militants captured a soldier in June, at least 250 Palestinians have been killed, around half of them civilians.

Israel says the offensive is designed to track down the kidnapped soldier and to stop militants firing rockets into Israel. Rocket attacks have increased in recent days.

The latest gunman killed was from the Aqsa Martyrs Brigades, a wing of President Mahmoud Abbas's Fatah movement. His car was struck by a missile in an Israeli air strike, emergency workers said.

A local commander of the group who was in the car was critically wounded and two passersby were also hurt.

Four Hamas militants were killed when a house they were hiding in was hit by a series of Israeli missiles, security sources said. A fifth later died of his wounds. Three others were killed in separate raids.

The Israeli military confirmed it had carried out the attacks, including the air strike.

A column of Israeli tanks backed by attack helicopters moved into an area east of the town of Jabalya, outside Gaza City, overnight, part of what Israel has dubbed operation "Rain Man".

Witnesses said about two dozen tanks moved into the areas of Beit Lahiya and the industrial zone of Beit Hanoun, two northern Gaza towns, after darkness fell on Saturday. A military spokeswoman said the deployment was part of an operation to halt rocket fire at Israel.

VOWS OF REVENGE

A spokesman for Hamas's military wing issued a statement vowing "we will bombard and strike everywhere" in response to Israel's attacks in Gaza.

"Our reaction will be strong," spokesman Abu Ubaida said.

Israeli media reported that Defence Minister Amir Peretz had instructed the military to prevent rocket attacks from Gaza on towns in southern Israel.

Peretz lives in Sderot, a town near Gaza hit frequently by rockets in the past several years, including since Israel's pullout of troops and more than 8,000 Jewish settlers from Gaza last year after 38 years of occupation.

Three Israelis were wounded by rocket attacks on Friday, a military spokeswoman said.

The recent fighting also comes amid deepening divisions among Palestinians, with forces from Hamas, which controls the Palestinian government, clashing with rivals loyal to Fatah.

Hamas defeated Fatah in elections in January this year and there has been a power struggle between the two groups since.

Weeks of talks to form a unity government, and potentially put an end to the in-fighting, have so far failed to bear fruit.

Attempts to organise a first formal meeting between Abbas and Israeli Prime Minister Ehud Olmert also appear to have been put on hold, postponing efforts to revive peace talks.

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