* Deadliest attacks in surge of violence
* Tensions exacerbated by kidnapping, killing of youths
* Hamas says Israel will "pay the price" (Revises death toll, adds Israeli foreign minister's comments)
By Nidal al-Mughrabi
GAZA, July 7 (Reuters) - Israeli air strikes killed six Hamas militants in the Gaza Strip on Monday, the Islamist group said, in the deadliest attacks in a surge of violence exacerbated by the kidnapping and killing of three Israeli youths and a Palestinian teen.
Palestinian militants kept up their now-daily rocket launchings into Israel as pressure mounted from hardliners in Prime Minister Benjamin Netanyahu's coalition for tougher action against Hamas, the dominant force in the Gaza Strip.
The Israeli military said its aircraft targeted "terror sites and concealed rocket launchers" in the enclave. It said about 10 rockets hit southern Israel on Monday, wounding one soldier.
Tensions between Israelis and Palestinians have risen over the killing of three Jewish teenagers in the occupied West Bank, which Israel has blamed on Hamas, and of a 16-year-old Palestinian in East Jerusalem.
Israel on Sunday announced it had arrested six Jewish suspects in what police believe was the revenge murder of Mohammed Abu Khudair, whose charred body was found in Jerusalem on Wednesday, a day after Naftali Fraenkel and Gil-Ad Shaer, both 16, and Eyal Yifrah, 19, were buried.
The three Jewish seminary students went missing while hitchhiking on June 12. Hamas has neither confirmed nor denied having any role in their disappearance.
Hamas's armed wing said five of its members were killed in air strikes in the southern Gaza town of Rafah, at the Egyptian border on Monday. The group had said six men had died, but one was later found to be alive, seriously wounded, under rubble.
Israeli aircraft also attacked in northern Gaza, killing one Hamas fighter, the group said.
Netanyahu has pledged "to do whatever is necessary" to restore quiet to southern Israeli communities. But he also cautioned against any rush toward wider confrontation with Hamas, whose arsenal includes long-range rockets that can reach Israel's heartland and its business capital, Tel Aviv.
Foreign Minister Avigdor Lieberman, citing a rift with Netanyahu on dealing with Hamas, said on Monday his nationalist party was dissolving its merger with the prime minister's conservative Likud but would stay in the governing coalition.
"A situation in which a terrorist group has hundreds of rockets which it can decide any moment to use is intolerable," Lieberman told a news conference. "There have been suggestions that we wait ... but I don't know what we're waiting for."
REVENGE
Hamas spokesman Sami Abu Zuhri, speaking after the six Hamas men were reported killed, accused Israel of committing a "grave escalation" in violence and threatened to retaliate, saying Israel would "pay the price".
Abu Khudair's death has touched off clashes between police and stone-throwing Arab protesters in East Jerusalem and in several Arab villages in northern and southern Israel. Police said they arrested 30 people during violence on Sunday night.
The Gaza flare-up began in mid-June, during Israel's search for the three teens, when Israel arrested many Hamas members across the West Bank. The Israeli military says more than 160 Gaza rockets have struck Israel since.
In Gaza, Hamas has been reeling over an Egyptian crackdown on most of the estimated 1,200 cross-border smuggling tunnels run by the group, which Egypt says are used to take weapons into the Sinai Peninsula.
Hamas, an offshoot of the Muslim Brotherhood, which Egypt's military-backed government has declared a terrorist organisation, denies Cairo's allegations that it poses a danger to Egyptian security and helps Sinai militants.
Hamas frustrations have also mounted over the failure of a new unity government, formed under a reconciliation pact with President Mahmoud Abbas's Fatah movement, to pay salaries of Hamas's 40,000 public servants in the enclave.
Hamas fatalities on Monday were the highest the group has suffered in an Israeli attack since a Gaza war in late 2012. (Writing by Maayan Lubell and Jeffrey Heller; Editing by Robin Pomeroy)
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