Dan Ronen, the chief of the northern police command, told Army Radio: "It was a direct hit on a crowd of people." 

Israeli Channel Two television reported that nine army reservists were among the dead.

Fourteen people were wounded, including four who are in a serious condition, rescue officials said. The wounded suffered from shrapnel injuries that caused serious internal bleeding, according to a doctor at the hospital in Haifa.

The mayor of Kiryat Shmona, Haim Barvivai, said other rockets landed around the Israeli border town damaging a synagogue and starting a series of fires.

Forty-two Israelis have been killed in rocket attacks on the north of the country.

Border clashes

Hezbollah said it had attacked Israeli forces in south Lebanon on Sunday, inflicting several casualties. There was no immediate word from the army on Israeli casualties in the fighting.   

Five died when Israeli aircraft bombed a house in the southern Lebanese village of Ansar and three were killed in Naqoura, on the Mediterranean coast side of Lebanon's border with Israel.

Lebanon says more than 900 people, mostly civilians, have been killed by Israeli attacks.