(Updates with talks on draft resolution, paragraphs 7, 9-12)

By Irwin Arieff

UNITED NATIONS, Nov 9 (Reuters) - A Palestinian official accused Israel on Thursday of "state terrorism" in an attack in Gaza that killed 18 civilians and said Israeli apologies for such incidents were insincere and no longer acceptable.

"This is terrorism, this is state terrorism," Palestinian U.N. Observer Riyad Mansour told an emergency Security Council meeting. "These are war crimes for which the perpetrators must be held accountable under international law."

But an Israeli diplomat insisted Wednesday's deadly shelling in Beit Hanoun had been accidental. Israel was "deeply saddened" by it and doing its utmost to avoid a repetition, Israeli envoy Daniel Carmon said.

"Although the Palestinian civilians killed in this incident may have been killed by Israeli fire, they are in fact the victims of Hamas terrorism," Carmon added, referring to the militant movement heading the elected Palestinian government, which refuses to recognize Israel or renounce violence.

"If Qassam rockets stopped sailing out of Gaza into Israel, the incident in Beit Hanoun would never have happened," he said.

The council met at the request of the 22-member Arab League, the 57-nation Organization of the Islamic Conference and the 116-nation Non-Aligned Movement after what Israeli Prime Minister Ehud Olmert referred to as "a technical failure," but which Palestinian leaders have called a massacre.

Arab states pressed the council to adopt a resolution calling for an immediate cease-fire in Gaza and a U.N. observer force to enforce the cease-fire, as was done in southern Lebanon after the 34-day war between Israel and Lebanon's Hezbollah that ended in August.

U.S. VETO?

Since the end of June, more than 450 Palestinians had been killed in the Gaza strip, "making death, mourning and grief a near-daily ritual for the people of Gaza," Mansour said. While Israel apologized after each such incident, it was "with a forked tongue" even as military attacks continued.

But council members said the draft text needed rewriting, and envoys agreed to meet again on Friday to discuss possible changes, with a vote unlikely before next week.

Even then, the United States, Israel's closest ally, was likely to veto the measure as Washington routinely opposes council intervention in the Middle East as ineffective in ending the cycle of violence there, the diplomats said.

In Washington, State Department spokesman Sean McCormack said the United States understood the deaths were an issue "that people want to talk about in the Security Council, although the Security Council is not traditionally the forum where Israeli-Palestinian issues are resolved."

"We don't think that any sort of one-sided resolutions are really the most productive way to address this issue," he said.

The 18 dead, including seven children and four women, were buried at a mass funeral in Gaza on Thursday. Some Hamas lawmakers have threatened to resume suicide attacks on Israel.

Angela Kane, the U.N. assistant secretary-general for political affairs, said a government of national unity was the best way to work toward Palestinian law and order.

But the Israeli attack had led to a suspension of talks on a new government, she said, urging both Palestinians and Israelis to "pause and reflect on the fact that the conflict between them will not be resolved by force."

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