Hezbollah rammed an Israeli warship with an unmanned aircraft rigged with explosives and set it ablaze Friday, Israeli military officials said, after attack jets smashed Lebanon's links to the world one by one and destroyed the headquarters of the Islamic guerrilla group's leader.

The attack on the warship off Beirut's Mediterranean coast — which left four sailors missing — was the most dramatic incident on a violent day in the conflict that erupted suddenly Wednesday and appeared to be careening out of control despite pleas from world leaders for restraint on both sides.

"You wanted an open war and we are ready for an open war," Hezbollah leader Sheik Hassan Nasrallah said in a taped statement. He vowed to strike even deeper into Israel with rockets.

Israel again bombarded Lebanon's airport and main roads in the most intensive offensive against the country in 24 years. For the first time it struck the crowded Shiite neighborhood of south Beirut around Hezbollah's headquarters, toppling overpasses and sheering facades off apartment buildings. Concrete from balconies smashed into parked cars, and car alarms set off by the blasts blared for hours.

The toll in three days of clashes rose to 73 killed in Lebanon and at least 12 Israelis, as international alarm grew over the fighting and oil prices rose to above $78 a barrel. The U.N. Security Council held an emergency session on the violence, and Lebanon accused Israel of launching "a widespread barbaric aggression."

In addition to the fighting in Lebanon, Israel pressed ahead with its offensive in the Gaza Strip against Hamas, striking the Palestinian economy ministry offices early Saturday.

The Israeli warship, which had been carrying several dozen sailors, was towed to Haifa after suffering heavy damage. The fire was put out after several hours. The military confirmed news reports that four sailors were missing and said a search for them was underway.

The Israeli army said the source of the attack was still under investigation. But military officials, speaking on condition of anonymity because of the probe, said the ship had been targeted by an unmanned drone.

The explanation indicated Hezbollah has added a new weapon to the arsenal of rockets and mortars it has used against Israel.

In another maritime strike, Israel said that a Hezbollah rocket barrage missed its target and struck a civilian merchant ship. They did not know the nationality of the ship, or whether there were casualties.

Despite fears the assault could bring down the Western-backed, anti-Syrian government of Lebanon, Israeli Prime Minister Ehud Olmert vowed the campaign would continue until Hezbollah guerrillas, who are backed by Syria and Iran, lose their near-control of southern Lebanon bordering Israel.

Olmert agreed in a phone call with U.N. chief Kofi Annan to allow U.N. mediation for a cease-fire — but only if the terms include the disarming of Hezbollah and the return of two Israeli soldiers whose capture by the Muslim guerrillas Wednesday triggered the fighting.

Hezbollah rained dozens of rockets on towns in northern Israel. One rocket hit a home in Meron, killing a woman and her grandson. Some 220,000 people in northern towns hunkered down in bomb shelters.

Nasrallah was not hurt after the Israeli missiles demolished his headquarters among two buildings in Beirut's southern neighborhoods, the militant group said. Three people died in the airstrikes.

The attack on the warship was apparently timed to coincide with Nasrallah's message on the militant group's television station. "The surprises that I have promised you will start now. Now in the middle of the sea, facing Beirut, the Israeli warship ... look at it burning," Nasrallah boasted.

Israeli military officials said the drone apparently was developed by Hezbollah. The Lebanese guerrilla group has managed to fly unmanned spy drones over northern Israel at least twice in recent years.

"If they kill us all, we will still not give them back the prisoners," said one resident, Nasser Ali Nasser, as palls of smoke rose from fuel depots hit farther south. "We have nothing left to lose except our dignity. We sacrifice ourselves for Sheik Nasrallah," he said.

President Bush, who has backed Israel's right to defend itself, spoke by phone with Lebanese Prime Minister Fuad Saniora from a G-8 summit in Russia and "reiterated his position" that the Israeli attacks should limit any impact on civilians, White House spokesman Tony Snow said.

But the promise fell short of the Lebanese leader's request for pressure for a cease-fire.

Israel's campaign appeared to have a two-pronged goal. One was to batter Hezbollah and end its near control of the south on Israel's borders. Continued    Source: AP - Daily Graphic