JERUSALEM (EJP)---Israel’s leaders told visiting EU foreign policy chief Catherine Ashton that the continuing rocket barrage from the Gaza Strip on southern Israel "is intolerable."

In  a meeting with Ashton on Wednesday in Jerusalem, Israeli Foreign Minister Avigdor Lieberman said "no European country would agree to a similar reality," adding: "We will not tolerate this situation for many days. We cannot continue to restrain ourselves."

After weeks of escalatory rocket fire and a cross-border bombing attack that critically injured an Israeli officer, Palestinian groups led by Hamas launched at least 72 rockets and mortars at Israeli communities overnight severely wounding two Thai workers.

Israeli President Shimon Peres later also addressed the escalation in the south during his meeting with Ashton. "While we're sitting here, mothers and their children are in shelters. The funds transferred to the Palestinians from Qatar were aimed to aid construction development, but were used for terror," he said. 

"We won't be able to restrain ourselves much longer." he added.

But Ashton did not directly address the escalation in southern Israel, rather focusing  on Iran.  

She told Peres : "I know that you have supported what we are trying to do with Iran, through negotiations. You also recognise the work that the EU has done on sanctions: the twin track approach whereby we keep up the pressure in order to persuade Iran to come and talk with us and to determine the path to the future in a way that will bring greater security to the region, greater security to the world."

Ashton is in Israel as part of a regional tour which has also taken her to Jordan and Lebanon.

She later held talks with Israeli Prime Minister Benjamin Netanyahu, but Defence Minister Ehud Barak cancelled their planned meeting over the persistent unrest in Gaza.

In the evening, she was to meet with Palestinian Authority Prime Minister Salam Fayyad before talks on Thursday with President Mahmoud Abbas.

Speaking to public radio after meeting Ashton, Lieberman said he told his guest the peace process was being completely blocked by Abbas.

On the eve of Ashton’s arrival in Israel, Netanyahu made a visit to Gilo where he insisted that Israel "will continue to build in Jerusalem."

The statement came days after Ashton issued a declaration "deeply regretting the decision by Israel to approve the expansion of Gilo settlement."

While the EU calls Gilo a "settlement" beyond the pre-1967 Green Line, Israel considers the neighbourhood as part of unified Jerusalem, its "eternal capital."

Lieberman responded to Ashton by saying that "the EU should focus on the problems that are surfacing between different nations on European soil. After these issues are successfully resolved, we will gladly hear any suggestions regarding a solution to the problems with the Palestinians."

He added: "These automatic EU condemnations indicate a lack of a basic understanding of the reality in the region ... Gilo is an inseparable part of Jerusalem, and Jerusalem is an inseparable part of Israel."