SDEROT, Israel - Schools closed and residents huddled in bomb shelters or fled in buses yesterday as another barrage of rockets struck this border town, the target of thousands of Palestinian attacks since 2001.

Late in the day, a homemade rocket hit an electrical transformer in southern Israel, the army said, knocking out power to the 24,000 residents of Sderot.

More than 20 rockets were fired on the town yesterday, wounding two people. The attacks came a day after rockets injured five residents and destroyed several homes in the town - along with any remnant of a sense of security here.

Hamas' decision to rocket Sderot this week appeared to be an attempt to draw Israel into Palestinian infighting as a way of uniting warring factions.

Prime Minister Ehud Olmert is under increasing pressure to launch a major operation in Gaza, from which Israeli troops withdrew in September 2005.

Security officials said the army favored an immediate, large-scale ground offensive in Gaza while the Shin Bet security service favored a more measured response. The officials spoke on condition of anonymity because the policy is still in the making.

Sderot's mayor, Eli Moyal, was skeptical the government would do anything.

"No country in the world would allow one of its cities to be bombed for six years straight," he said.

Some predict Olmert - who drew sharp criticism over last summer's war in Lebanon - would think twice before launching another major offensive in Gaza.

Moyal said more than 4,500 Qassam rockets had landed in the working-class town since 2001, killing seven residents and wounding dozens. Real estate prices have dropped 60 percent, commerce has collapsed, and a recent poll indicated that about half of the residents would leave if they could.

The main impact of the rocket attacks on Sderot has been psychological, with experts warning the damage would be long-lasting.

"The anxiety level with the kids is unimaginable," said Tami Sagie, head of psychological services in Sderot. "We have a whole generation that was born into the [rocketing], children whose first word is boom."

Sagie spoke of teenagers wetting their beds when rockets hit. Others regularly sleep with their parents, or find it difficult to concentrate, she said.

It's not just children who are affected.

Noam Amram, 62, said he had been seeing a therapist since a rocket landed next to him four months ago. "I still haven't gotten over it," he said. "Every noise I hear, I shudder. I can't sleep. I live in fear."

Sagie said that unlike suicide bombings - where there is a sudden, one-time shock - the steady barrage of rockets had made it particularly tough for those in the town, which includes a community of Jewish immigrants from Ethiopia.

"It is one trauma after another," she said. "They have lost faith and are beginning to believe that no one can help them."