ISRAELI TANKS AND TROOPS MASSED NEAR GAZA ON TUESDAY FOR A THREATENED OFFENSIVE AGAINST PALESTINIAN MILITANTS AS THE GOVERNMENT SAID IT WOULD TARGET HAMAS LEADERS IF AN ABDUCTED SOLDIER WAS NOT FREED. IN NORTHERN GAZA, PALESTINIANS BLOCKED ROADS WITH DIRT AND BARBED WIRE. MILITANTS WIELDING AUTOMATIC RIFLES AND ANTI-TANK ROCKETS PATROLLED THE STREETS AS TENSIONS HIT THEIR HIGHEST ALONG THE FRONTIER SINCE ISRAEL QUIT GAZA NEARLY A YEAR AGO. THE UNITED STATES URGED ISRAEL TO GIVE DIPLOMACY A CHANCE TO WIN THE RELEASE OF CORPORAL GILAD SHALIT, WHO WAS SEIZED ON SUNDAY BY MILITANTS WHO ALSO KILLED TWO SOLDIERS IN A RAID ON A MILITARY BORDER POST, REUTERS REPORTED. ISRAEL SAID LEADERS OF THE RULING HAMAS MOVEMENT COULD BECOME ASSASSINATION TARGETS, INCLUDING THE GROUP'S SUPREME CHIEF KHALED MESHAAL WHO LIVES IN EXILE IN DAMASCUS. HAMAS'S ARMED WING HAS SAID IT CARRIED OUT SUNDAY'S ATTACK WITH OTHER FACTIONS BUT HAS NOT SAID IT WAS HOLDING SHALIT. "THEY HAVE TO UNDERSTAND ONE THING, THAT NOBODY IS IMMUNE, INCLUDING KHALED MESHAAL," CABINET MINISTER AND FORMER GENERAL BENJAMIN BEN-ELIEZER SAID ON ARMY RADIO. ABU UBAIDA, A SPOKESMAN FOR HAMAS'S ARMED WING, WARNED: "THE ENEMY WILL REGRET THE MOMENT THEY RAID GAZA. THE PRICE WILL BE SO HEAVY." AT NIZMIT HILL, JUST ACROSS FROM NORTHERN GAZA, AROUND 100 ISRAELI TANKS AND ARMOURED PERSONNEL CARRIERS FACED THE COASTAL STRIP. OFFICIALS HAVE NOT SAID WHEN TROOPS MIGHT GO IN. ISRAELI MEDIA SAID THE GOVERNMENT HAD ALSO APPROVED A CONTINGENCY PLAN TO CUT FOOD, WATER AND GAS SUPPLIES TO THE GAZA STRIP IF THE 19-YEAR-OLD CONSCRIPT WAS NOT FREED. ISRAEL HAS SHUT GAZA'S CROSSINGS. HAMAS'S ARMED WING AND THE OTHER FACTIONS INVOLVED IN THE RAID, THE POPULAR RESISTANCE COMMITTEES (PRC) AND THE ISLAMIC ARMY, HAVE SAID ISRAEL WOULD NOT GET INFORMATION ABOUT SHALIT UNLESS IT FREED ALL JAILED PALESTINIAN WOMEN AND YOUTHS. ISRAEL HAS REJECTED THE DEMAND.