GAZA CITY, Gaza Strip (AP) – Hamas militants attacked a Fatah funeral procession and children were among the wounded in a Gaza City shootout Tuesday, a second day of street fighting that brought an appeal for calm from top officials on both sides.

Nine Palestinians, including five children on their way to school, were wounded in a gunfight in Gaza City. Each side blamed the other for triggering it.

Then, Hamas militants attacked the funeral procession in southern Gaza for a Fatah gunman killed Monday, setting off two bombs and opening fire. Fatah gunmen dropped to the ground and returned fire. Three unarmed bystanders were slightly wounded, hospital officials said.

The fighting broke out hours before international mediators began discussing whether to ease the financial siege on the Hamas-led government because of its violent anti-Israel ideology.

An “urgent call” for calm was issued by Hamas’ political leader Khaled Mashaal and Fatah official Farouk Kaddoumi, meeting Tuesday in the Syrian capital.

“We call everyone to resort to calm and rule of law and turn clashes to dialogue,” the two officials said in a joint statement. “If strife occurs the Zionist Entity will be the only beneficiary.”

In the Gaza City clash, Fatah said Hamas gunmen opened fire from a car at seven bodyguards protecting a house where a top Fatah activist, Samir Masharawi, was staying. The bodyguards riddled the vehicle with gunfire, shooting out its tires, and Fatah said at least one Hamas gunman was wounded.

Dozens of Hamas and Fatah gunmen streamed to the scene, and eight more people were wounded in the sporadic gunbattles that followed, including five children between the ages of 8 and 14, Fatah said. The children were not seriously hurt, hospital officials said.

Hamas said Masharawi’s bodyguards kidnapped three members of Hamas’ military wing earlier Tuesday, and Hamas gunmen came to free them. The outbreaks of fighting have been preceded by kidnapping charges, but there has been no actual evidence of abductions.

Hamas and Fatah have been in a power struggle since Hamas won January parliamentary elections. Most members of the security forces are loyal to Fatah, and instead of trying to disarm them, Hamas has set up its own militia.

Both sides are training for escalating clashes, but so far the violence has been localized and on a small scale. Despite deep disagreements, Palestinians have pulled back from the brink of all-out conflict in the past.

But the burgeoning economic crisis is fraying nerves on all sides.

Severe shortages of medicines and inability to pay public workers are already plaguing Palestinians just five weeks after Hamas took over, showing how quickly hardships have turned into deprivation because of the Western aid cutoff and Israel’s decision to withhold $55 million it collects in taxes each month for the Palestinians.

Representatives of the “Quartet” of Mideast mediators _ the U.S., United Nations, European Union and Russia _ were meeting Tuesday in New York to discuss the aid cutoff. The Europeans are said to favor a trust fund administered by moderate Palestinian President Mahmoud Abbas, bypassing Hamas, while the U.S. is hesitant to renew funding. The U.S. and EU label Hamas a terror organization.

Secretary of State Condoleezza Rice said leaders would discuss a plan to relieve a shortage in medicine and health supplies in the Palestinian areas at the meeting.

The official reason for withholding funds is to prevent them from reaching Hamas, which has sent dozens of suicide bombers into Israel over the past decade, killing hundreds. Hamas Muslim ideology does not accept a Jewish state in the Middle East, and the group has rebuffed Israeli and international demands to recognize Israel, renounce violence and accept previous Israeli-Palestinian partial peace accords.

But many hope the economic crisis will turn the people against Hamas. So far, however, there is no sign of that, beyond small demonstrations sponsored by Fatah, Hamas’ main rival.

At a rally in Gaza, Palestinian Prime Minister Ismail Haniyeh of Hamas called for an end to the sanctions, but added defiantly, “We are not going to surrender, cave in to this siege, compromise the rights of our people or recognize the legitimacy of the occupiers on our land (Israel).”

Abbas, who is also the Fatah leader, appealed to Western powers to free up the funds for his people.

“Our main goal at this time is … to end the economic siege of the Palestinian people,” Abbas said in the West Bank city of Ramallah, while ordering security forces to put an end to the internal violence.

Also Tuesday, the Israeli military said it foiled an attempt last week to smuggle 1,100 pounds of TNT to the Gaza Strip from Egypt by boat. Sailors saw 11 bags thrown overboard as the boat escaped. Divers found the explosives, the military said.

Israel has charged that since its pullout from Gaza last summer, arms smuggling from Egypt has increased.