By Nidal al-Mughrabi and Jeffrey Heller
GAZA/JERUSALEM (Reuters) - An open-ended ceasefire in the Gaza war held on Wednesday as Prime Minister Benjamin Netanyahu faced strong criticism in Israel over a costly conflict with Palestinian militants in which no clear victor has emerged.
On the streets of the battered, Hamas-run Palestinian enclave, people headed to shops and banks, trying to resume the normal pace of life after seven weeks of fighting. Thousands of others, who had fled the battles and sheltered with relatives or in schools, returned home, where some found only rubble.
In Israel, sirens warning of incoming rocket fire from the Gaza Strip fell silent.
Netanyahu told a news conference Israel had dealt Hamas its toughest blow ever and had rebuffed its demands for a truce. He said it was "too early to say" whether the calm would be prolonged, then threatened the Islamist group:
"If it resumes fire, we will not tolerate a sprinkle of shooting at any part of Israel, what we did in response now, we will respond even more vigorously."
But Israeli media commentators, echoing attacks by members of Netanyahu's governing coalition, voiced deep disappointment over his leadership during the most prolonged bout of Israeli-Palestinian violence in a decade.
Israeli opinion polls showed his popularity plummeting, such as a survey on Channel 10 television in which viewers gave him a grade of 55 percent, down from a 69 percent score at the beginning of the month.
"After 50 days of warfare in which a terror organization killed dozens of soldiers and civilians, destroyed the daily routine (and) placed the country in a state of economic distress ... we could have expected much more than an announcement of a ceasefire," analyst Shimon Shiffer wrote in Yedioth Ahronoth, Israel's biggest-selling newspaper.
"We could have expected the prime minister to go to the president's residence and inform him of his decision to resign his post."
Answering critics, Netanyahu told a news conference: "I don't set unrealistic goals. We're not dealing here with populism."
Palestinian health officials say 2,139 people, most of them civilians, including more than 490 children, have been killed in the enclave since July 8, when Israel launched an offensive with the declared aim of ending rocket salvoes.
Israel's death toll stood at 64 soldiers and six civilians.
The Egyptian-mediated ceasefire agreement that took effect on Tuesday evening, called for an indefinite halt to hostilities, the immediate opening of Gaza's blockaded crossings with Israel and Egypt, and a widening of the territory's fishing zone in the Mediterranean.
A senior Hamas official voiced willingness for the security forces of Western-backed Palestinian President Mahmoud Abbas and the unity government he formed in June to control the passage points.
Both Israel and Egypt view Hamas as a security threat and are seeking guarantees that weapons will not enter Gaza, a narrow, densely populated territory of 1.8 million people.
Under a second stage of the truce that would begin a month later, Israel and the Palestinians would discuss construction of a Gaza sea port and Israel's release of Hamas prisoners in the occupied West Bank, possibly in a trade for the remains of two Israeli soldiers believed held by Hamas, the officials said.
COMPETING VICTORY CLAIMS
In Gaza, several thousand Palestinians cheered and waved green Hamas banners as the movement's deputy leader, Ismail Haniyeh, making his first public appearance since the war, proclaimed victory over Israel in the latest fighting.
Haniyeh boasted that the group's armed wing had fired rockets deeper inside Israel than ever. "The victory this time is greater than ever before," he said. A song played in the background, whose lyrics intoned, "hit, hit, Tel Aviv."
Israel said it dealt a strong blow to Hamas, killing several of its military leaders and destroying the Islamist group's cross-border infiltration tunnels.
"Hamas's military wing was badly hit, we know this clearly through unequivocal intelligence," Yossi Cohen, Netanyahu's national security adviser, said on Army Radio.
But Israel also faced persistent rocket fire for nearly two months that caused an exodus from a number of border communities and disrupted daily life in its commercial heartland.
"They are celebrating in Gaza," cabinet minister Uzi Landau, of the far-right Yisrael Beitenu party in Netanyahu's coalition, told Israel Radio. He said that for Israel, the outcome of the war was "very gloomy" because it had not created sufficient deterrence to dissuade Hamas from attacking in the future.
Nahum Barnea, one of Israel's most popular columnists, expressed concern "that instead of paving the way to removing the threat from Gaza, we are paving the road to the next round, in Lebanon or in Gaza".
"The Israelis expected a leader, a statesman who knows what he wants to achieve, someone who makes decisions and engages in a sincere and real dialogue with his public," he wrote in Yedioth Ahronoth. "They received a seasoned spokesperson, and very little beyond that."
Ben Caspit, writing in the Maariv daily, said there was no victory for Israel in a conflict that resulted in "a collapsed tourism industry (and) an economy approaching recession".
Israel's central bank has estimated the conflict will knock half a point off economic growth this year.
But with diplomatic moves on Gaza's future still pending, there was no immediate talk publicly among Netanyahu's coalition partners of any steps to break up the alliance.
In a further sign of the truce's impact, Egypt eased restrictions at the Rafah border crossing with Gaza, allowing World Food Programme supplies containing a shipment of 25,000 food parcels into the coastal territory for the first time since 2007, a statement by the humanitarian group said.
Israel has regularly permitted food and other humanitarian goods to be shipped into Gaza across its border, during the latest fighting as well. A government website says 5,359 truckloads of goods have transited the Kerem Shalom crossing with Gaza since July 8, the day the seven-week conflict erupted.
Israel has said it would facilitate the flow of more civilian goods and humanitarian and reconstruction aid into the impoverished territory if the truce was honored.
But, Cohen said: "(Hamas) will...not get a port unless it declares it will disarm. It will not get even one screw unless we can be sure it is not being used to strengthen Gaza's military might."
(Additional reporting by Allyn Fisher-Ilan and Ari Rabinovitch in Jerusalem; Writing by Jeffrey Heller, Editing by Ralph Boulton)