* Israel shuns Cairo truce talks while Palestinians go
* Some tanks withdraw; northern evacuees told to return
* At least 1,675 Gazans killed; 66 dead on Israel's side
* Hamas says missing Israeli soldier probably died (Updates with Netanyahu comments)
By Giles Elgood and Nidal al-Mughrabi
JERUSALEM/GAZA, Aug 2 (Reuters) - Israel will go on fighting Hamas in the Gaza Strip even after the army completes its core mission of destroying the cross-border tunnels used by Palestinian militants to attack its territory, Prime Minister Benjamin Netanyahu said on Saturday.
As Israeli television showed live footage of some tanks withdrawing from Gaza in an apparent winding down of the 25-day campaign, Netanyahu said Hamas would pay an "intolerable price" if it continued to attack Israel.
Israel began its air and naval offensive against Gaza on July 8 following a surge of cross-border rocket salvoes by Hamas and other guerrillas, later escalating into ground incursions.
Shelling exchanges continued earlier on Saturday, pushing the Gaza death toll given by Palestinian officials up to 1,675, most of them civilians. Israel has confirmed that 63 soldiers have died in combat, while Palestinian shelling has also killed three civilians in Israel.
Netanyahu's comments came as Israel signaled it was taking action to withdraw on its own terms, saying it would not attend talks in Cairo this weekend aimed at achieving a new truce.
In some areas of Gaza, witnesses saw Israeli tanks pulling back towards the border, while the Israeli military gave Palestinians who had fled one town the all-clear to return.
Israel's main goal in its incursion into Gaza last month was to destroy Hamas's network of tunnels, and the IDF (Israel Defense Forces) said they were close to achieving that.
More than 30 tunnels and dozens of access shafts have been unearthed and were being blown up, the military said.
"Our understanding is that our objectives, most importantly the destruction of the tunnels, are close to completion," a military spokesman, Lieutenant-Colonel Peter Lerner, said.
Netanyahu said in a televised speech that military action would continue even after that goal is achieved.
"After completing the anti-tunnel operation, the IDF will act and continue to act, in accordance with our security needs and only according to our defense needs, until we achieve our objective of restoring security to you, Israel's citizens," he said.
"PAY FOR EVERY MINUTE"
Hamas said it was absurd for Israel to claim to have destroyed all the tunnels. "Netanyahu will pay for every minute he spends carrying out more aggression against our people," a spokesman said.
Several ceasefires between Israel and Hamas, the Islamist movement that dominates the Gaza Strip, have failed to take hold or quickly collapsed, most recently on Friday after two Israeli soldiers were killed and a third went missing in an ambush.
Israel accused Hamas of seizing Second-Lieutenant Hadar Goldin, and the United States blamed the group for a "barbaric" breach of the truce. The United Nations was more guarded in its censure of Hamas but demanded Goldin's release.
Israeli forces have been searching for Goldin in southern Gaza, but his family expressed alarm at reports of an Israeli pull-out.
"I demand that the State of Israel not leave Gaza until it brings my son home," Goldin's mother, Hedva, told reporters.
Hamas said it believed its gunmen had struck before Friday's ceasefire began and that if they captured Goldin, he probably died with his captors in heavy Israeli barrages that followed.
In Cairo, a Palestinian delegation arrived for new truce talks, which would include Hamas's demand Egypt ease movement across its border with blockaded Gaza. Turning its back on those negotiations, Israel said it would not send envoys as scheduled.
"They (Hamas) cannot be trusted to keep their word. They cannot stop (firing) because, for them, a ceasefire at this stage, whether by arrangement or not by arrangement, would mean acknowledging the worst possible defeat," Deputy Foreign Minister Tzachi Hanegbi told Israel's Channel Two TV.
Hamas, its guerrillas massively outgunned by a Jewish state it considers an eternal enemy, said it would prevail.
Any unilateral pullout by Israel would mean "it has failed to achieve any of its goals and would be a clear defeat for the occupation army and for its leaders," Hamas's bloc in the Palestinian parliament said in a statement. "Gaza resisted, endured and will achieve victory."
Israel said Palestinians on Saturday launched 74 rockets across the border, most of which fell harmlessly wide while seven were shot down by its Iron Dome interceptor, including over Tel Aviv.
Crowded Gazan towns close to the Israeli border have seen devastating clashes and the flight of tens of thousands of Palestinians as tanks and troops swept in to confront dug-in guerrillas.
The Palestinian Center for Human Rights said 520,000 people had been displaced by the fighting - more than a quarter of Gaza's population.
Israel said on Saturday evacuees from Beit Lahiya, a northern town of 70,000 residents, could return. But fear still gripped the townspeople.
"No one has told us to go back," said Talab Manna, a 30-year-old father of seven camped out at a U.N.-run school serving as a refugee haven. "We can't risk going back and being bombed by the Israeli forces."
Quoting a senior military officer, Israel Radio said the condition of the missing soldier was not known. It said Goldin was last seen next to the two troops killed by a Hamas suicide bomber - suggesting he may not have survived and his captors had a corpse.
Hamas had long threatened to capture Israelis for a prisoner swap. In 2011, Israel released more than 1,000 Palestinian prisoners in exchange for Gilad Shalit, a soldier snatched by Hamas five years earlier. Israel has twice freed prisoners for the bodies of soldiers held by Lebanon's Hezbollah militia.
The Rafah clash in which Goldin was reported to have been captured triggered Israeli shelling from the middle of Friday morning that killed 150 Palestinians. By afternoon, Israel declared an end to the truce - which was meant to have lasted 72 hours.
Rafah residents said they had received recorded telephone warnings from Israel to stay indoors during a barrage that wreaked widespread ruin.
"It was like an action movie - explosions everywhere, cars flying up in flames, people crushed under houses that were bombed," local man Bassim Abed told Reuters. (Additional reporting by Dan Williams and Ori Lewis in Jerusalem, Mostafa Hashem and Oliver Holmes in Cairo; Editing by Robin Pomeroy)
BEFORE YOU GO
08/08/2014 2:47 PM EDT
White House Concerned By Renewed Fighting
The White House on Friday urged Israel and the Palestinians to resume talks and do what they can to protect civilians after Egyptian-mediated negotiations failed to extend a ceasefire and rocket fire resumed.
"The United States is very concerned about today's developments in Gaza," White House spokesman Josh Earnest told reporters.
"We condemn the renewed rocket fire and we are concerned about the safety and security of civilians on both sides of that conflict," he said.
08/08/2014 1:42 PM EDT
Official: 5 Palestinians Killed In Gaza
Five Palestinians, including a 10-year-old boy, have been killed in Israeli airstrikes on Gaza since a ceasefire fell apart on Friday, a Palestinian medical official reported to Agence France Presse.
Meanwhile, the Israeli army said Palestinian militants fired 35 rockets into Israel on Friday, injuring a soldier and a civilian.
The father of a ten-year old Palestinian boy, who was killed in an Israeli air strike on the Sheikh Radwan neighbourhood in northern Gaza City, mourns at the city's Al-Shifa hospital, on August 8, 2014. (MOHAMMED ABED/AFP/Getty Images)
08/08/2014 9:23 AM EDT
Palestinian Delegation Says Gaza Talks Will Continue
Palestinian factions will remain in Cairo and press on with Egyptian-mediated talks despite the end of the ceasefire in Gaza, the head of the delegation, Fatah official Azzam Ahmed, said on Friday.
"We are not for escalation. We are ready to continue through our Egyptian brothers in negotiating to reach a final agreement that would return the rights to their owners," Ahmed said. "I mean here lifting the blockade of Gaza."
Ahmed said Palestinian negotiators were due to meet Egyptian intelligence officials, who have been mediating the talks, later in the day. He said Palestinian factions were united in their decision not to extend the 72-hour truce that ended at 0500 GMT and had been clear about their basic demands to end the conflict.
08/08/2014 9:13 AM EDT
Egypt: Agreement Close In Gaza Talks
Egypt called on Friday for an immediate resumption of the ceasefire in Gaza and a return to the negotiating table, saying that only a few outstanding issues remained in negotiations it was mediating between Israel and the Palestinians.
"The foreign ministry calls on all sides to rise to their responsibilities ... and to return immediately to the ceasefire commitment and exploit the opportunity available to resume negotiations on the very limited sticking points that remain in the fastest possible time," the foreign ministry said in a statement.
08/08/2014 3:58 AM EDT
Israeli Airstrikes On Gaza Resume
BREAKING: Israel says it's resumed strikes on Gaza in response to rocket fire, after end of 3-day truce.— The Associated Press (@AP) August 8, 2014
08/08/2014 3:02 AM EDT
Cease-Fire Ends With New Rocket Attacks
A 72-hour cease-fire expired at 8 a.m. today, and not long after, Gaza militants began firing rockets at Israel, The Associated Press reported.
The Israeli military said at least 10 rockets had been fired at Israel since the truce ended. Prior to the attacks, a senior official for Hamas said the militant groups would not extend the cease-fire.
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08/06/2014 2:46 PM EDT
Official: Israel Agrees To Extend Ceasefire
Israel has conditionally agreed to extend a ceasefire that ended a month of fighting in Gaza beyond a Friday deadline, an Israeli official said on Wednesday, speaking on condition of anonymity.
The official did not say for how much longer Israel had agreed to extend the truce, only that: "Israel has expressed its readiness to extend the truce under its current terms," referring to the deal brokered by Egypt that took effect on Tuesday.
Hamas had no immediate comment.
08/06/2014 2:12 PM EDT
IDF: Rocket Sirens Were False Alarm
IDF confirms rocket sirens in southern Israel were false alarm http://t.co/QN677jtlXE— Haaretz.com (@haaretzcom) August 6, 2014
08/06/2014 1:18 PM EDT
Report: Rocket Sirens Sound At Gaza Border
ABC Foreign Editor Jon Williams reports that the IDF have confirmed the rocket sirens are sounding, but are checking to see if it is a false alarm.
08/05/2014 4:20 PM EDT
Israel Arrests Kidnapping Suspect
Reuters reports that Israel has arrested one of the suspects in the kidnapping and killing of three Israeli teenagers in the West Bank in June.
Hussam Kawasme, a 40-year-old resident of the West Bank city of Hebron, was arrested on July 11 in connection with the killing of Israelis Gil-Ad Shaer, Naftali Fraenkel and Eyal Yifrah, who went missing on June 12 and were discovered dead a couple of weeks later.
Their kidnapping sparked a cycle of violence that led to the month-long conflict between Israel and Palestinian militants in the Gaza Strip.
Kawasme's arrest was made public for the first time on Tuesday in a document from an Israeli court case over whether houses belonging to him and two other suspects - who remain at large - should be destroyed as a punitive measure.
The lawyers listed as representing Kawasme were not reachable for comment.
The court document said Kawasme had admitted to helping to organize the kidnapping - securing funding from the Hamas Islamist group in Gaza and purchasing weapons which he passed on to the two other suspects who carried out the attack.
Kawasme also helped to bury the bodies of the teenagers in a plot of land he had bought a few months earlier, it said.
Israel has named the other two suspects in the case as Marwan Kawasme and Amar Abu Aysha.