Twelve Israeli soldiers were killed Sunday and at least nine other people were wounded in a Hezbollah rocket attack. Rockets also struck the city of Haifa late in the day, collapsing several buildings, killing at least three people and causing widespread injuries. Israel retaliated late Sunday with a barrage of air strikes against Beirut's southern suburbs. Israel on Sunday also arrested a leading Hamas politician in the Palestinian territories - a move condemned by Egypt and the Arab League.

Fighting intensified Sunday, as diplomatic efforts at the United Nations aimed at bringing about a ceasefire gained momentum.

Israel suffered its worst Hezbollah rocket attacks to date, when a rocket landed near a group of Israeli reservists in northern Israel, and a barrage of rockets collapsed several buildings in Haifa, trapping a number of people and causing a number of casualties.

Israelis on Sunday carefully studied the draft U.N. resolution under consideration that calls for a full cessation of hostilities, while allowing Israel to respond if attacked by Hezbollah, and stay in Lebanon until international peacekeepers arrive.

The resolution has been rejected by Hezbollah and by Lebanon. Israeli officials say, however, the resolution is a recognition of the dangers posed by the Hezbollah militant group, which controls much of southern Lebanon.

Yigal Palmor, a spokesman for Israel's Foreign Ministry, said "Hezbollah cannot be allowed to restore its complete rule of impunity in southern Lebanon, and this is something the international community perfectly understands today."

Palmor says Israel believes a second proposed resolution, which would authorize international peacekeepers to be deployed in Lebanon, will be the key to ending the conflict. "If the international community wants to see its own resolution implemented, as well as previous Security Council resolutions and future ones, it needs to give the Lebanese government a strong instrument, in the form of an armed and well instructed international force, to implement not only what the international community wants, but what the Lebanese government and the vast majority of the Lebanese people want," he said.

Israeli officials say, until that happens they will continue fighting Hezbollah in south Lebanon.

In a move that is being widely condemned in the Arab world, Israel on Sunday arrested Palestinian parliament speaker Abdel Aziz Dweik, a senior Hamas leader in the West Bank. In late June, following the abduction of an Israeli soldier by Palestinian militants, Israel arrested dozens of Hamas officials, including eight members of the Palestinian Cabinet. Israel, the United States and the European Union have classified Hamas as a terrorist organization, and Yigal Palmor of Israel's Foreign Ministry says Sunday's arrest was a preventative measure. "This measure of arresting a chief Hamas official comes in the framework of the ongoing struggle with Hamas in the south. It is not intended to raise the temperature, which is high as it is. It is intended to maybe try to prevent Hamas from raising the stakes," he said.

The arrest was condemned by other Hamas leaders, such as Mushir Al Masri, a Hamas member of the Palestinian parliament. Al Masri and other Hamas leaders say the arrest was unnecessary and violates international law. The arrest was also condemned by Saeb Erekat, a close associate of Palestinian President Mahmoud Abbas, who described it as an attempt by Israel to hold the peace process hostage.

Officials of Egypt, the Arab League and the Organization of the Islamic Conference also criticized the Israeli action. A statement from Egypt's foreign minister says the arrest is not only a violation of international laws, but also of previous agreements signed by both Israel and the Palestinians.