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UN chief Ban Ki-Moon on Tuesday visited the rocket-scarred southern town of Sderot, calling Hamas' rocket fire against Israel "appalling and unacceptable."

Just before, Ban toured the war-torn Gaza Strip where he voiced shock and anger at the "heartbreaking" devastation wreaked by Israel's three-week offensive on the Hamas-ruled coastal territory. He pledged aid for Palestinians after Israeli attacks killed 1,300 and left thousands homeless.

During his visit to Sderot Ban classified Palestinian militants' projectiles as indiscriminate weapons and Hamas attacks are violations of basic humanitarian law. However, he also urged Israel to end its crippling blockade of Gaza and said the embargo would only strengthen Hamas by fueling desperation in impoverished Gaza.

Ban was touring Israel and Gaza on Tuesday in the wake of Israel's three-week offensive on Gaza, launched with the goal of ending years of rocket fire on Sderot and other southern towns.

"I have seen only a fraction of the destruction. This is shocking and alarming," Ban said while in Gaza, condemning the "excessive use" of force by Israel.

"These are heartbreaking scenes I have seen and I am deeply grieved by what I have seen today," he told a news conference held against a backdrop of still smouldering food aid in a UN warehouse set ablaze by Israeli gunfire last Thursday.

During his tour, Ban called for a full investigation into the Israeli shelling of three United Nations buildings in Gaza over the course of the war.

Israel Defense Forces shelling struck the UN headquarters in Gaza as well as two UN schools. The attacks heavily damaged the headquarters and killed nearly 40 people near one of the schools.

Ban called the attacks outrageous and demanded a full investigation through proper judiciary systems. He also demanded guarantees that this will never happen again.

Israel has said militants used the UN buildings as cover to launch attacks. But the military already has launched its own investigation into the incidents.

Israel and Hamas both ceased fire on Sunday, after an offensive that claimed the lives of some 1,300 Palestinians, according to Gaza health officials, and 13 Israelis. The last of Israel's ground troops were expected to pull out of Gaza on Tuesday if the quiet holds, defense officials said.

Ban, who personally intervened during the war to try to stop the violence, said over the weekend that he was sending a team to assess the humanitarian needs so the United Nations could issue an emergency appeal for funds.

The first estimates by independent surveyors said Gaza lost nearly $2 billion in assets, including 4,100 homes, about 1,500 factories and workshops, 20 mosques, 31 security compounds, and 10 water or sewage lines. Shattered glass and mounds of rubble littered city streets.

Homeowners digging through the debris in Gaza City, the territory's largest city, carried off vases, refrigerators, dishes and baby beds, some loading their goods into cars and trucks. Utility crews began planning repairs to electrical and sewage and water systems. A senior technician, Mofid Awad, said 80 percent of the electricity grid in Gaza City was damaged.

Before setting off for Gaza, Ban met with Prime Minister Ehud Olmert, who told him Hamas could not be allowed to lead the reconstruction process in Gaza and thereby gain some measure of legitimacy, Olmert's office said in a statement.

"The UN and international organizations must lead the reconstruction in conjunction with the Palestinian Authority and Egypt, which has been mediating between Israel and Hamas," Olmert said.

Ban is the most senior international official to visit Gaza since Hamas militants seized power in June 2007. The Hamas government is not internationally recognized, and Ban was not scheduled to meet with the group.