KIRYAT SHMONA, Israel (Reuters) - Israelis in the northerly Galilee region emerged on Wednesday from a night in bomb shelters as Israel weighed its response to the heaviest Katyusha rocket attacks from Lebanon in a year. In south Lebanon, Israeli troops and their local militia allies fought pitched battles overnight with Moslem guerrillas, a security source in the area said. About half an hour after the fighting eased, an Israeli-backed militiaman was killed by shelling, the source said. The Israeli army gave the all-clear to emerge from bomb shelters in northern Israel in the morning, some 11 hours after Katyushas slammed into the border town of Kiryat Shmona and other Galilee communities. Security sources in Lebanon said at

least 26 Katyushas had been launched on Tuesday after Israeli helicopters, firing rockets at a car in south Lebanon, killed a Lebanese militia official. Israeli officials said dozens of rockets had landed in Galilee. "Ten civilians and two soldiers were slightly wounded and property was damaged," the Israeli army said. "Israeli artillery returned fire towards the source of the attacks." Hizbollah, the Shi`ite Moslem Party of God that leads a guerrilla campaign to oust Israeli troops from a south Lebanon occupation zone established in 1985, said it had fired rockets at several Galilee towns and villages. Israeli Prime Minister Benjamin Netanyahu was due to discuss the security situation in the north at the weekly meeting on Wednesday of his "security cabinet". Defence Minister Yitzhak Mordechai visited northern Israel and said the rocket attacks would not deter Israel from striking against guerrillas in Lebanon. The Israeli army said the Katyusha volleys into Galilee, the heaviest since last August, were in "blatant violation" of understandings reached two years ago under which all sides pledged not to target civilians. Some Israeli politicians questioned the wisdom of the attack that killed Hossam al-Amin, who led operations of the Shi`ite Moslem Amal movement in the western sector of south Lebanon. Cabinet hawk Eitan, an architect of the costly 1982 invasion of Lebanon, called for Israel`s so-called security zone to be expanded. Eitan demanded an immediate military response to the attack. Military commentators raised the possibility that Israel would retaliate by striking at Lebanon`s infrastructure, such as roads or power plants.