The Middle Eastern violence that battered financial markets this past week only escalated over the weekend, as Israel expanded its air raids on Lebanon, and Hezbollah rockets killed at least nine people and wounded dozens in the Israeli coastal city of Haifa.Israeli bombing on Sunday killed at least 23 people in southern Lebanon, according to the BBC, bringing the Lebanese death toll to more than 120 since the crisis began Wednesday. Israel¿s most recent strikes were in retaliation for the attack on Haifa Sunday, which Israeli Prime Minister Ehud Olmert warned would have "far-reaching consequences." Even before the Haifa attack, Israel had expanded its offensive against Lebanon. On Saturday it hit the northern city of Tripoli, as well as coastal radar installations. The crisis between Israel and Lebanon erupted after Hezbollah seized two Israeli soldiers in a raid Wednesday aimed at pressuring Israel to release Palestinian prisoners. The violence prompted three consecutive days of selling in the stock market last week, with the Dow Jones Industrial Average and the S&P 500 ending the week down 3.2% and 2.3%, respectively. Concerns that the fighting could lead to disruptions of Middle Eastern oil supplies caused crude to soar to a new high of more than $78 a barrel. Precious metals, which are viewed as safe-haven investments, also rose sharply. The clashes have alarmed world leaders and generated a lot of discussion at the summit of G8 leaders in St. Petersburg, Russia. In a joint statement Sunday, they blamed "extremist forces" -- specifically, Hezbollah and elements of Hamas in Gaza -- for the immediate crisis. "These extremist elements and those that support them cannot be allowed to plunge the Middle East into chaos and provoke a wider conflict," the statement said. "The extremists must immediately halt their attacks."
But the G8 leaders also said Israel must "be mindful" of the strategic and humanitarian consequences of its actions. "We call upon Israel to exercise utmost restraint, seeking to avoid casualties among innocent civilians and damage to civilian infrastructure and to refrain from acts that would destabilize the Lebanese government," the statement said. At the meeting, President Bush said Syria, which has ties to Hezbollah, should help end the fighting, according to the The New York Times. On Saturday, Arab League foreign ministers held an emergency meeting in Cairo, and Secretary General Amr Moussa said they had decided that the Middle East peace process had "failed," according to the Times. He said the league would seek help from the U.N. Security Council.