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Hezbollah leader Hassan Nasrallah yesterday threatened to retaliate against Israel for the killing of militant commander Imad Mughniyah, saying "his blood will lead to Israel's fall."

Mughniyah, Hezbollah's deputy secretary general, was killed in a bomb blast in a residential neighborhood in Damascus late Tuesday. Israel denied involvement.

At Mughniyah's funeral in Beirut, Nasrallah warned of a war without boundaries, vowing to strike Israeli targets overseas after accusing Israel of taking the fight beyond Lebanese borders by killing Mughniyah in Syria.

"You have killed Haj Imad outside the natural battlefield," Nasrallah said, addressing Israel and referring to Hezbollah's longtime contention it only fights Israel within Lebanon and along their common border.

"You have crossed the border," Nasrallah said in the fiery eulogy. "With this murder, its timing, location and method - Zionists, if you want this kind of open war, let the whole world listen: Let this war be open."

"Like all human beings we have a sacred right to defend ourselves," said Nasrallah, speaking in a videotaped message broadcast over a giant screen at the ceremony. "We will do all that takes to defend our country and people."

Tens of thousands of people defied harsh weather conditions to take part in Mughniyah's funeral. They walked for several kilometers after the coffin, clad in the yellow Hezbollah flag, from the Sayed a-Shuahda Mosque in south Beirut to the burial site, chanting "death to America, death to Israel."

Giant pictures of Mughniyah in uniform were hung over buildings.

Nasrallah had gone into hiding in 2006, fearing an Israeli assassination and making only three appearances since the summer war that year with Israel. "In every future war there won't be one Imad [Mughniyah] or a few thousand fighters, but tens of thousand loyal fighters who are willing to die as martyrs," he warned.

Iran's Foreign Minister Manouchehr Mottaki attended the funeral in Lebanon and offered condolences to the militant's family in a south Beirut hall.

Iran's spiritual leader and highest authority Ayatollah Ali Khamenei sent a condolence letter to Nasrallah, saying that the death of a man like Mughniyah, while painful to people of honor, "is a blow that awakens the nations."

Beirut was divided into two worlds on Thursday, separated by an abyss. At 10 A.M., in Martyrs' Square in the center of town, thousands attended a rally marking the third anniversary of the assassination of former prime minister Rafik Hariri. At 2 P.M., Hezbollah flexed its muscles during a mass funeral for Mughniyah.

Fearing clashes, authorities deployed thousands of troops. The two mass gatherings ended with a few fistfights and scuffles between government supporters and opponents that left at least four injured. Sa'ad Hariri issued a death announcement for Mughniyah in which he called for Lebanese unity. Prime Minister Fouad Siniora also issued a laconic death notice, even though he is considered an outcast by Hezbollah. "Let Allah welcome the shaheed in all his mercy and house him in heaven," the notice read.