JERUSALEM, Nov 16: Foreign Minister Silvan Shalom hinted on Tuesday that Israel may take military action in Lebanon after two homemade rockets were fired at northern Israel.

"Israel cannot keep its arms folded as if nothing has happened, that is why we must seriously study our political response. On the military front, we will react in a time and manner that seems appropriate to us," he told army radio.

One of the homemade rockets fired on Monday exploded in a field near the Israeli town of Shlomi, several kilometres from the Lebanese border, while the other crashed into the Mediterranean, the radio said.

Neither projectile caused any damage or casualties, and were apparently fired by a Palestinian group operating in southern Lebanon.

"It is important for Hezbollah and Palestinian extremists to stress their presence after the absence of Yasser Arafat," Mr Shalom added of the late Palestinian leader.

The Fatah chief in Lebanon, Sultan Abul Aynain, denied that Mr Arafat's mainstream movement was involved in the rocket attacks.

"The Israeli accusations are false and completely unfounded because we have made no decision to use south Lebanon" to launch attacks, he said at Rashidiyeh refugee camp, which lies just 20 kilometres (12 miles) from the Israeli border.

"I fear these accusations could be a pretext for aggression against the refugee camps in Lebanon and our officials," he said.

The Jewish state protested on Nov 3 to the UN peacekeeping force in Lebanon against Katushya rockets being fired into its territory from southern Lebanon.

According to a Western source in Lebanon, a pro-Syrian Palestinian faction close to Hezbollah was responsible for a Katyusha attack on Oct 28.-AFP