GAZA CITY, Gaza Strip -- Israeli forces retaliated today for a deadly attack by militants on a nearby Jewish settlement, blowing up three large, empty buildings in Gaza after evacuating 2,000 Palestinians from their homes.

Huge blasts rocked the area for miles around, sending plumes of black smoke and debris into the air. The operation came as tensions rose once again in the three-year Israeli-Palestinian conflict.

The developments, coupled with continued political uncertainty in the Palestinian leadership, pushed Mideast peace efforts further into the background.

The Israelis targeted three unfinished 12-story buildings on a sandy hill overlooking the heavily guarded settlement of Netzarim, where two Palestinian gunmen infiltrated early Friday morning and killed three Israeli soldiers, including two women. One of the gunmen escaped, while the other was shot and killed by other soldiers.

The Israelis first blew up a Palestinian police post where the Israeli military said the attacker fled.

They then set off explosives in and around the three tall buildings, which belong to Palestinian Preventive Security, the main Palestinian force in Gaza.

Before the huge blasts, Israeli soldiers ordered nearby residents in southern Gaza City out of their homes. The military said the evacuation was for their protection, to avoid harming civilians during the destruction of the three buildings.

Mohammed Hassan Ali, 39, a father of five, said, "I can see dozens of people from the building leaving, mostly on foot. We don't know where to go."

Residents said soldiers told the people to move toward the Nusseirat refugee camp, about two miles away.

Maj. Sharon Feingold, an Israeli military spokeswoman, said it was a "temporary evacuation for their own safety," and after the operation ended, the residents were permitted to return to their homes.

Palestinian militants used the unfinished buildings as lookout points to help prepare the deadly Friday infiltration into Netzarim, an isolated settlement southwest of Gaza City, the Israelis said.

As Palestinians left their homes, the settlers at Netzarim moved into bomb shelters for protection, the military said.

On Saturday, a Palestinian wounded in Monday's Israeli missile strike in the Nusseirat camp died, raising the toll to 11. Israeli helicopters targeted a car carrying suspected militants, killing and wounding bystanders.

The military moves overshadowed the U.S.-backed "road map" peace plan meant to stop the violence and lead to a Palestinian state in 2005. Contacts over the plan have been frozen for weeks, both because of the violence and because of internal Palestinian political turmoil.

Palestinian Prime Minister Ahmed Qureia has threatened to resign Nov. 4, when a one-month mandate of his emergency Cabinet, appointed by Yasser Arafat, expires. Israel and the United States are boycotting Arafat, charging that he is responsible for Palestinian violence, and the absence of a stable Palestinian government has stymied contacts between the two sides as violence continues.

In Jerusalem on Saturday night, Israeli peace activists blamed Israel Prime Minister Ariel Sharon for the stalemate and bloodshed.

About 4,000 Peace Now demonstrators gathered in front of Sharon's residence, chanting "Sharon, Go Home" and carrying torches. One banner read "Sharon: Terminator of Israel," an expression of the crowd's anger at the prime minister's frequent crackdowns on Palestinians in the West Bank and Gaza Strip.

"The economy is in a grave decline. There is no security. Civilians and soldiers are killed every day," said Ran Cohen, a legislator from the dovish Meretz party.

In the West Bank, meanwhile, masked Israeli troops raided two Palestinian hospitals Saturday, arresting two suspected militants -- one of them in critical condition -- in a commando-style operation the army said would be replicated in other hospitals where there might be terror suspects.

The troops, wearing black ski masks and carrying assault rifles, entered the Nablus hospitals before dawn Saturday, snatching one militant from his hospital bed and finding a second hiding in a basement with pistol in hand, the army said.

One militant belonged to Hamas and the other the Al Aqsa Martyrs' Brigades, a militant group with links to Yasser Arafat's Fatah faction.

Human rights groups and Palestinians condemned the raids, fearing hospitals no longer are neutral ground in the ongoing fighting and saying international law bans military operations in medical facilities.

The army countered that international law prevents militants from seeking refuge in a hospital. Including Saturday's raids, the army has carried out four hospital raids in the last two months, and army officials said they were planning more.