CAIRO (Reuters) ? Egypt and Israel sought Sunday to defuse a diplomatic crisis over the killing of five Egyptian security personnel during an Israeli operation against cross-border raiders, but crowds of Egyptians protested angrily at the Israeli embassy in Cairo.
One demonstrator scaled several floors of the high-rise embassy building overnight to tear down the Israeli flag and replace it with an Egyptian one.
Ahmad al-Shahat quickly shot to fame on Twitter under the name "Flagman," while newspapers and one would-be Egyptian leader feted him as a hero.
"Hamdeen Sabahy, the Egyptian presidential candidate, sends a salute of pride to Ahmad al-Shahat, the public hero who burned the Zionist flag that spoiled the Egyptian air for 30 years," Sabahi said in statement.
The crisis began when five Egyptian security personnel died as Israeli forces pursued a Palestinian faction who killed eight people in southern Israel Thursday. Israel said the group entered Israel from the Hamas-run Gaza Strip via Egypt's Sinai desert.
Several hundred protesters remained in front of the Israeli embassy near the Nile waterfront Sunday, watched over by hundreds of troops and police. Some said they would stay until Israel's ambassador is ejected from Egypt.
A protest of any size near the Israeli embassy would have been quickly smothered by state security in the era of former President Hosni Mubarak.
The Cairo-based Arab League condemned "the Israeli attack on the Egyptian forces" in a statement and said Israel bore "full responsibility for this crime."
However, there were signs that Egypt and Israel were both trying to ease the gravest crisis in their relations since longtime ruler Mubarak's overthrow in February.
Egypt said Saturday it would recall its ambassador from Israel after the killings, but it was unclear if the withdrawal would go ahead. The Foreign Ministry summoned the Israeli charge d'affaires to protest and demand a joint investigation.
Israeli Defense Minister Ehud Barak said Israel regretted the deaths and told the army to conduct the investigation with Egypt, which responded with cautious approval.
A delegation led by an unidentified high-ranking Israeli envoy arrived in Cairo on a private plane from Tel Aviv on Sunday to a low-key reception, airport sources said. Four cars drove onto the tarmac to whisk the delegation away.
The head of Egypt's ruling military council, Field Marshal Mohamed Hussein Tantawi, met with ministers in a crisis management committee Sunday to discuss the events in Sinai, state media said.
Barak said: "We highly appreciate the responsibility the Egyptian government is showing (regarding) the peace agreement and I expressed directly the Israeli regret at the loss of life of Egyptian security people during the incident."
EGYPTIAN AMBASSADOR RECALLED?
The spat has highlighted the dilemma faced by the generals now ruling Egypt, caught between pressure to preserve the 1979 peace treaty with Israel and popular hostility to the Jewish state, perceived as trampling on national dignity.
It was unclear if Egypt's ambassador in Israel had returned home and a strongly-worded initial statement announcing his withdrawal was removed from a government website, prompting speculation that Cairo might have retracted its decision.
A spokesman said the cabinet stood by statements made by its information minister, but declined to comment on the recall of the ambassador, which was also reported by state media.
The army is trying to keep a lid on social tensions as Egypt prepares for elections later in the year as part of a promised transition to democratic civilian rule after Mubarak's removal.
Egypt's condemnation of Israel in a statement after a second cabinet crisis meeting Saturday was unusually blunt.
"Egyptian blood is not cheap and the government will not accept that Egyptian blood gets shed for nothing," state news agency MENA quoted a cabinet statement as saying.
The Israeli decision to work with Egypt to investigate the killings is "positive in appearance but does not fit with the weight of the incident and the state of Egyptians' outrage from the Israeli actions', MENA added.
MORE ROCKET FIRE FROM GAZA
The Israeli military killed the leadership of the faction it said was responsible for last week's attack in an air strike in Gaza Thursday and launched more than a dozen more raids on Friday. Medical officials say at least 15 Palestinians have been killed, including five civilians, three of them children.
Arab League Secretary-General Nabil Elaraby called the Israeli air attacks on Gaza a "war crime."
"We ask the Security Council to ... quickly take all necessary procedures to stop the offensive on the Gaza Strip," the Cairo-based League said in a statement.
Israel said it was acting in self-defense and did not rule out further action to prevent the launch of rockets and missiles against Israeli cities.
Palestinian militants fired at least 50 rockets at Israel from the Gaza Strip Saturday. An Israeli man was killed and at least seven other people were wounded by rockets.
Militants fired a dozen more rockets from Gaza toward Israel Sunday. At least two landed in the Egyptian border town of Rafah, apparently in error, but did not explode and no one was hurt, an Egyptian security source said.
Sources in Hamas, the Islamist movement that controls Gaza, said Israel arrested 120 of its activists and supporters in the West Bank city of Hebron Sunday. The Israeli military spokesman has declined comment.
A senior Hamas official in Gaza told Reuters militant factions "are ready to halt fire, but Israel has to agree."
The U.N. is due to publish the results of an investigation into Israel's seizure of a Gaza-bound ship last year in which nine Turks died, leading Turkey to demand an apology and compensation from Israel.
Israel has said it would pay into a "humanitarian fund" for those bereaved or hurt aboard the ship, which was trying to break a blockade of Gaza, but it has refused to apologize.
"Israel should not think that the Palmer report will be published and the present stalled state of relations will continue as they are... They will get worse," Turkish Anatolian news agency quoted Foreign Minister Ahmet Davutoglu as saying.
(Additional reporting by Ali Abdelatti, Amr Dalsh, Omar Fahmy and Ayman Samir in Cairo and Ori Lewis and Allyn Fisher-Ilan in Jerusalem; Writing by Tom Pfeiffer; Editing by Jon Hemming and Jan Harvey)
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