Israel on Thursday buried two soldiers killed in a Hezbollah missile strike that triggered Israeli fire on southern Lebanon, raising tensions between the bitter enemies to their highest in years.
But the Israeli-Lebanese border was calm, as officials in the Jewish state played down the threat of a new war with Lebanon's Iran-backed Shiite militant group.
In a rare such declaration, Defence Minister Moshe Yaalon said Hezbollah had passed on a message through the United Nations peacekeeping mission in south Lebanon, UNIFIL, saying it did not want a further escalation.
"We have received a message... that, from their point of view, the incident is over," he told public radio.
Analysts say neither side seems keen for a repeat of the devastating Israel-Hezbollah conflict of 2006 and that any response is likely to be limited.
The two soldiers were killed Wednesday when Hezbollah fired anti-tank missiles at a convoy in an Israeli-occupied area on the border with Lebanon.
- Mourners gather in Jerusalem -
Israeli forces responded to the attack -- which came in retaliation for an Israeli strike on the Golan Heights that killed senior Hezbollah members -- with artillery, tank and air fire on several villages in southern Lebanon.
There were no reports of Lebanese casualties, but a 36-year-old Spanish peacekeeper with UNIFIL was killed in the exchange of fire.
In Israel, schools reopened on Thursday, as did Mount Hermon ski resort in the Israeli-occupied portion of the Golan Heights.
In the Lebanese border village of Majidiya, residents collected spent artillery shells from Wednesday's strikes, an AFP photographer said.
At the local UN base a blackened concrete tower could be seen with part of its wall blown out, and a Spanish flag flew at half-mast.
Hundreds of mourners gathered at Mount Herzl military cemetery in Jerusalem for the burial of 25-year-old Captain Yochai Kalangel.
Sobbing relatives greeted mourners, many wearing the purple beret of Kalangel's Givati (Highland) Brigade.
There was a similar turnout for the other soldier killed, 20-year-old Staff Sergeant Dor Chaim Nini, buried in the town of Shtulim in south-central Israel.
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Questions have been raised in Israel about why they were travelling in unarmoured vehicles in the volatile area.
Israel said it considered Wednesday's attack the "most severe" since 2006, when war with Hezbollah killed more than 1,200 people in Lebanon, mostly civilians, and some 160 Israelis, most of them soldiers.
Prime Minister Benjamin Netanyahu blamed the attack on Iran.
"This is the same Iran that is now trying to achieve an agreement, via the major powers, that would leave it with the ability to develop nuclear weapons," he said.
Israel has threatened military action to stop arch-foe Iran obtaining atomic weapons. Tehran insists its programme is only for civilian purposes.
- Chances of war 'very slim' -
Netanyahu held talks with top security brass late Wednesday, warning afterwards: "Those behind today's attack will pay the full price."
Still, analysts said Israel, fresh from a summer war with Hamas in Gaza and heading for a general election in March, was not eager for a full-scale conflict.
"Hezbollah has 100,000 rockets, compared with the 10,000 of Hamas," the Palestinian Islamist group which controls Gaza, said analyst Boaz Ganor of the Herzliya Interdisciplinary Centre.
"The human cost of such a war would be enormous, and no Israeli leader will be pro-active in this direction," he said.
As for Hezbollah, it is deeply involved in Syria's civil war, fighting with President Bashar al-Assad's forces against mostly Sunni rebels.
"Hezbollah is very busy in Syria; the last thing that it needs is a second front," Yaakov Amidror, a former major general, told AFP.
On the Lebanese side, Labour Minister Sejaan Azzi told AFP the government had "received assurances from major countries that Israel won't escalate the military situation, and that yesterday's response was enough... for the time being."
Tension in the area had been building since an Israeli air strike on the Syrian-controlled sector of the Golan killed six Hezbollah fighters and an Iranian general on January 18.
Hezbollah leader Hassan Nasrallah -- who is to deliver an address on Friday -- had earlier threatened retaliation for Israel's repeated strikes inside Syria.