Tali Kalangel (centre), the widow of Major Yochai Kalangel and family members mourn during his funeral at Mount Hertzel cemetery in Jerusalem on Thursday. Yochai Kalangel is one of the two Israeli soldiers and one Spanish UN peacekeeper that were killed a day earlier in the deadliest exchange of fire between Israel and Lebanon's Hezbollah militia since a 2006 war. 

AFP/Jerusalem

Israel was burying on Thursday two soldiers killed in a Hezbollah missile strike that triggered Israeli fire on southern Lebanon, raising tensions between the bitter enemies to their highest in years.

But the Israeli-Lebanese border was calm, and Israeli officials played down the threat of a new war with the powerful Iran-backed Shia group's militia.

In an unusual declaration, Israeli Defence Minister Moshe Yaalon said Hezbollah had passed on a message through the UN peacekeeping mission in southern Lebanon saying it did not want a further escalation.

"We have received a message... that, from their point of view, the incident is over," he told public radio.

Analysts say neither side seems keen for a repeat of the devastating Israel-Hezbollah conflict in 2006 and that any response is likely to be limited.

The two soldiers were killed when Hezbollah fired anti-tank missiles at a convoy in an Israeli-occupied area on the border with Lebanon.

Israeli forces responded to the attack - which came in retaliation for an Israeli strike on the Golan Heights that killed senior Hezbollah members - with artillery, tank and air fire on several villages in southern Lebanon.

There were no reports of Lebanese casualties, but a 36-year-old Spanish peacekeeper with UNIFIL was killed in the exchange of fire.

Mourners gather in Jerusalem  

In Israel, farmers were tending apple orchards close to the border fence, an AFP photographer said. Schools had reopened, as had the Mount Hermon ski resort in the Israeli-occupied portion of the Golan Heights.

In the Lebanese border village of Majidiya, residents were collecting spent artillery shells from Wednesday's strikes.

At the local UN base a blackened concrete tower could be seen with part of its wall blown out, and a Spanish flag was flying at half-mast.

Hundreds of mourners gathered at the Mount Herzl military cemetery in Jerusalem for the burial of one of the soldiers killed, 25-year-old Captain Yochai Kalangel.

Sobbing relatives greeted mourners, many wearing the purple beret of Kalangel's Givati (Highland) Brigade.

The other soldier, 20-year-old Staff Sergeant Dor Chaim Nini, was to be buried later in the town of Shtulim in south-central Israel.

Questions have been raised in Israel about why they were travelling in unarmoured vehicles in the volatile area.

Israel said it considered Wednesday's attack the "most severe" it had faced since 2006, when the war with Hezbollah killed more than 1,200 people in Lebanon, mostly civilians, and some 160 Israelis, mostly soldiers.

Prime Minister Benjamin Netanyahu blamed the attack on Iran.

"It is Iran that is responsible for yesterday's attack," he said at a memorial ceremony in southern Israel for late prime minister Ariel Sharon.

"This is the same Iran that is now trying to achieve an agreement, via the major powers, that would leave it with the ability to develop nuclear weapons, and we strongly oppose this agreement," he said.

Israel has threatened military action to stop arch-foe Iran obtaining atomic weapons. Tehran insists its programme is only for civilian purposes.

Netanyahu held talks with top security brass late Wednesday, warning afterwards: "Those behind today's attack will pay the full price."

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