GAZA (Reuters) – Israel vowed on Sunday to press on with a Gaza offensive and curb rocket strikes, threatening even stronger action despite U.N. condemnation of assaults that have killed more than 100 Palestinians, many of them civilians.

“Israel has no intention of stopping the fight against the terrorist organizations even for a minute,” Prime Minister Ehud Olmert told his cabinet, facing the new challenge of long-range rockets hitting the major southern Israeli city of Ashkelon.

Earlier, U.N. Secretary-General Ban Ki-moon condemned Israel for using “excessive” force in the Hamas-run Gaza Strip and demanded a halt to air and ground attacks that killed 61 people on Saturday, the bloodiest day for Palestinians since the 1980s.

In the latest fighting, two Palestinian militants were killed in the northern Gaza Strip, medical officials said. The bodies of two girls were found on Sunday in the rubble of a house in Gaza City hit by Israeli forces a day earlier.

Palestinian President Mahmoud Abbas designated Sunday a day of mourning. But he refrained from declaring dead a revived U.S.-backed peace process with Israel opposed by Hamas Islamists who seized the Gaza Strip from his Fatah faction in June.

Olmert said striking at Hamas only advanced the cause of peace, and “the Palestinian leadership — the one with which we wish to make peace — understands this.”

But Palestinian negotiator Saeb Erekat said: “If Israeli aggression continues, it will bury the peace process.”

After five days of fighting in which medical officials said more than 100 Palestinians have been killed, many of them civilians, Ban also called at an emergency U.N. Security Council session for a halt to rocket fire by Gaza’s Islamists militants.

In a statement, the Security Council said it was deeply concerned about the loss of civilian life in southern Israel and the Gaza Strip and urged a cessation of violence.

One Israeli has been killed by a rocket launched from Gaza since the current surge in bloodshed began. Hamas has said such salvoes would stop if Israel abandoned operations in the Gaza Strip and raids against militants in the occupied West Bank.

“We are acting to hit the Hamas infrastructure … the final target is to bring an end to the firing of Qassams,” Defence Minister Ehud Barak said about the crude rockets.

“This will not be achieved in the next two days, but we will continue the activity with all our strength. And we need to prepare for escalation, because the big ground operation is real and tangible,” Barak said.

Olmert has been under pressure from some of his cabinet members to launch a broader offensive in the Gaza Strip, especially after militants began firing longer-range Katyusha rockets at Ashkelon, a city of 120,000 people.

But Israeli officials have spoken publicly of the heavy loss of life such a campaign could cause on both sides.

Israeli commentators have also questioned whether military action could completely end rocket fire from the densely populated territory of 1.5 million Palestinians.

“I hear calls to wipe out entire (Gaza) neighborhoods. I won’t be involved in causing harm which in the short term can be beneficial but in the long term can be harmful,” an official quoted Olmert as telling members of his Kadima party.

The offensive has taken Israeli troops deeper into the Gaza Strip and in larger numbers than at any time since Israel pulled troops and settlers out of the territory in 2005, 38 years after its capture.

Two Israeli soldiers were killed in fighting with Gaza militants on Saturday.

U.S. Secretary of State Condoleezza Rice is due to meet Abbas and Olmert this week to try to accelerate faltering negotiations which President George W. Bush hopes can forge a peace deal before he leaves office in January.

Abbas’s chief peace negotiator Ahmed Qurie called off a meeting scheduled for Monday with his Israeli counterpart, Foreign Minister Tzipi Livni, Israeli officials said.

But Abbas, who echoed widespread Palestinian outrage at Israel’s tactics by calling it “more than a holocaust,” had taken no decision to abandon the peace process, aides said.

Palestinian officials said Saturday’s bloodshed was the worst since an “intifada” or uprising against Israeli occupation broke out in 2000, halting an earlier peace process.