In a joint statement released on Sunday following emergency talks in St Petersburg, presidents and prime ministers of the Group of Eight industrialized countries urged all sides in the escalating Middle East conflict to exercise restraint.

Israel must end the bombing of Lebanon and both Hezbollah and Hamas must cease all rocket attacks on Israel, the leaders of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States said. At the same time, they they also demanded the safe return of Israeli soldiers captured by militant groups and the release of arrested Palestinian ministers and lawmakers.

Urging Israel "to exercise utmost restraint," the statement demanded "an end to Israeli military operations (in Lebanon and Gaza) and the early withdrawal of Israeli forces from Gaza."

"We won't let ourselves be divided," German Chancellor Angela Merkel said at the G8 summit, referring to the struggle to come up with a unified response to the crisis at the summit given the differing views of the conflict among the members.

The joint statement shows that the G8 will not allow "terrorist forces and those who support them to create chaos," Merkel said. Asked whether she believed that there was a real chance for peace in the Middle East, Merkel said: "We hope that that's understood."

Israel launched its assault Wednesday to secure the freedom of three of its soldiers held by Hezbollah and the Palestinians and to bring an end to rocket attacks on its territory. Israel has pounded Hezbollah strongholds in southern Lebanon, targeting key infrastructure. The air and ground raids have claimed more than 100 lives in Lebanon, most of them civilians.

But as both Hezbollah and the armed wing of Hamas, one of three Palestinian groups holding an Israeli serviceman, have ties to Iran and Syria, there are fears the conflict could spread beyond Lebanon and Gaza.

Bush, Blair push to address root cause of conflict

Israel's relentless military offensive against the Shiite Hezbollah movement in Lebanon and Palestinian militants in the Gaza Strip exposed differences among the world's major powers earlier on Sunday.

The different approaches became apparent when US President George W. Bush insisted that Israel "has every right to defend itself against terrorist activity" but should be "mindful of the consequences," notably to the civilian population of Lebanon and its fragile government.

Following a meeting with British Prime Minister Tony Blair, Bush then went on to talk of root causes.

"One of the interesting things about this recent flare-up is that it helps clarify the root cause of instability in the Middle East and ... Hezbollah's relationship with Syria and Hezbollah's relationship with Iran and Syria's relationship with Iran," he said.

"Therefore, in order to solve this problem, it's really important for the world to address the root cause."

Blair seemed to agree when he told BBC television in a separate interview that there was an "arc of extremism" across the Middle East and the world would rue the consequences of failing to resolve the burning issues there.

"The only way we're going to get anything done in this situation both in respect of what's happening in Gaza and in respect of Lebanon is if we deal with the underlying causes that are giving rise to that," Blair said.

"And that means, one, that we sort out a situation between Israel and Palestine when you can get back into negotiating a two-state solution," he said. "Then secondly that we remove the influence of Hezbollah to disrupt both the prospects in the Lebanon and the prospects in the wider region."

Russia, France criticize Israeli offensive

But Bush's comments contrasted with those of summit host and Russian President Vladimir Putin, who late Saturday said Israel appeared to be pursuing objectives beyond the return of its soldiers.

"We condemn all terrorist acts that involve kidnapping people," Putin said. "But we have the impression that ...Israel is pursuing other, wider objectives."

After his bilateral talks with Blair on Sunday, Bush conferred with French President Jacques Chirac, who insisted that those "who jeopardize the security, stability and sovereignty of Lebanon must be stopped," leaving it vague as to which measures he had in mind.

Chirac called for "the protection of civilians, moderation and a durable ceasefire" in Lebanon and the Gaza Strip.

Rice: no temporary truce

US Secretary of State Condoleezza Rice, who is accompanying Bush in St Petersburg, rejected calls for a temporary truce, arguing that failing to address the underlying causes of the conflict might make things worse.

"We want a sustainable cessation of violence," she told reporters, citing the need to rein in Hezbollah, Hamas, Syria and Iran.