Israel pounds Lebanon

BEIRUT: Israeli warplanes and artillery pounded Lebanon for the 10th straight day on Friday after warning it could launch a full-scale ground invasion and ordered residents of the bomb-hit south to flee.

Lebanon said its army was ready to go into battle if Israel invaded, an action that would sharply raise the stakes in a conflict that has killed at least 360 people on both sides and raised fears of a humanitarian catastrophe.

Hezbollah's leader Hassan Nasrallah issued a defiant new message that Israel's firepower was failing to dent his fundamentalist Shiite movement and vowed he would only release two captive Israeli soldiers in a prisoner swap.

Israeli troops had battled guerrillas long into the night after mounting an incursion into Lebanon, leaving four soldiers dead and two Hezbollah fighters.

UN Secretary General Kofi Annan demanded an immediate ceasefire, highlighting the human suffering caused by the offensive which has triggered a desperate flight by Lebanese and foreign nationals.

"Both the deliberate targeting by Hezbollah of Israeli population centres with hundreds of indiscriminate weapons and Israel's disproportionate use of force and collective punishment of the Lebanese people must stop," Annan said.