The Arab League has condemned Israel's seizure of a ship carrying humanitarian aid from Lebanon to the Gaza Strip.

The league's envoy to the United Nations, Yahya Mahmassani called the interception an act of piracy and asked U.N. Secretary General Ban Ki-moon to intervene.

Crew members and journalists aboard the Lebanese ship say Israel's military fired in the ship's direction before Israeli forces boarded the vessel. The Israeli military denied it fired on the ship.

Israeli officials said the Lebanese ship was escorted to the Israeli port of Ashdod, and that any aid would be transferred to Gaza.

Meanwhile, Israeli officials say Prime Minister Ehud Olmert has agreed to the transfer of $43 million into Gaza to allow the West Bank-based Palestinian Authority to pay salaries.

Palestinians in Gaza have lacked cash due to an Israeli blockade of the territory. Israel says its blockade is aimed at stopping weapons smuggling to the Palestinian militant group Hamas, which rules Gaza.

In other news, a senior Hamas official, Ayman Taha deposited $11 million in an Egyptian bank, after Egyptian authorities prevented him from carrying the cash into Gaza.

The official was part of a delegation in Cairo this week for talks on a long-term truce between Israel and Hamas. The group was later allowed to cross into Gaza, after leaving Cairo without reaching a deal on a cease-fire.

Hamas officials say they hope to return to the Egyptian capital within the next week for further talks. They say they want more information from Israel before signing Egypt's proposal for an 18-month cease-fire.

Hamas has repeatedly called on Israel to open all border crossings into Gaza. On Thursday, French Foreign Minister Bernard Kouchner also urged the border be opened to allow in humanitarian aid. He made the comments after meeting with U.S. Secretary of State Hillary Clinton in Washington.

In violence on Thursday, Israeli officials say troops shot and killed a Palestinian who threw a grenade near the Gaza-Israel border.

Israel conducted a three-week offensive against Hamas in Gaza to put an end to rocket attacks. More than 1,300 Palestinians and 13 Israelis were killed before the offensive ended last month.

Some information for this report was provided by AFP, AP and Reuters.