(Adds new air strikes)

By Nidal al-Mughrabi

GAZA, May 23 (Reuters) - Palestinian militants rejected a call by President Mahmoud Abbas on Wednesday to stop firing rockets into Israel from Gaza, saying that Israel should first call off military operations there and in the West Bank.

Shortly after crisis talks ended inconclusively, Israel launched new air strikes in Gaza. Witnesses said that a food store and money-changer's office owned by supporters of the dominant Islamist faction Hamas, were destroyed. The army said both premises were used to funnel cash for "Hamas terrorism".

A surge in cross-border shelling by Gazan militants and retaliatory Israeli air and ground operations have put paid to a November truce and underscored the precariousness of the moderate Abbas's hold on power, which he shares with Hamas.

Abbas travelled to Gaza to cement a rapprochement between feuding factions and to urge Hamas and other groups behind the rocket salvoes to hold fire, officials said. He was rebuffed.

"We cannot surrender to blackmail as planes are overhead. We want a comprehensive calm that covers the Palestinian areas, both south and north," said militant spokesman Ibrahim Abu An-Naja.

He was referring to Gaza and the occupied West Bank, another territory where Palestinians seek statehood but where the November truce did not apply.

Israel has carried out regular and often deadly West Bank raids, saying they were necessary to prevent militant attacks, and has resisted calls for a renewed Gaza ceasefire.

Israeli Foreign Minister Tzipi Livni said this week that Hamas exploited previous periods of calm to "build up its power" and smuggle arms into Gaza from Egypt. Israel has also urged foreign powers to pressure Hamas into holding its fire.

An Abbas confidant said he was "exerting efforts with Arab and international parties to compel Israel to halt its army actions in Gaza and the West Bank so that calm can be restored".

Israeli officials could not immediately be reached for comment.

TENSIONS

Abbas also met Palestinian Prime Minister Ismail Haniyeh of Hamas, the first top-level talks since a surge of factional violence this month verging on civil war. Despite the latest truce, tensions between Hamas and Fatah remain high.

Some 50 Palestinians were killed in the latest round of factional fighting between Hamas and Fatah. A ceasefire seemed largely to be holding, and Egypt has proposed convening talks in Cairo to try to settle Hamas-Fatah disagreements.

Israeli air strikes over the last week have killed at least 35 Palestinians, medical officials said in Gaza. Militant groups said 23 of the dead were fighters.

Earlier on Wednesday, Israel's air force destroyed two buildings the army said were being used to manufacture and store arms. Palestinians denied the buildings held weapons. Nine people were hurt in the new strikes, hospital officials said. In a rare move, Israeli ground forces entered a small village in southern Gaza. During the brief raid, the troops held seven Palestinians for questioning, Israeli army sources said.

One of the Palestinians, 17-year-old Samer Qdaih, said the troops threatened to return to flatten the neighbourhood if rocket fire against Israeli towns continued.

Eight rockets were fired at south Israel, compared to 10 on Tuesday, the Israeli army and Palestinian witnesses said. No one was hurt. Hamas claimed responsibility for one of the salvoes.

Palestinian gunfire wounded two Israeli soldiers at a lookout position in northern Gaza, the army said. Hamas claimed responsibility.

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