JERUSALEM, Sept 3 (Reuters) - Israel accused Hezbollah onTuesday of setting up a factory for precision-guided missiles inLebanon's Bekaa valley, in a veiled warning of further possibleIsraeli counter-strikes after a drone attack near Beirut set offbrief cross-border fighting.
Sunday's shelling exchange was the fiercest between Israeland Hezbollah since the 2006 Lebanon war. While neither is keento escalate, Israel has said it could act against any upgradesof Hezbollah's missile arsenal, while Hezbollah has said itwould retaliate for attacks on Lebanese soil.
In a statement to media accompanied by satellite images, theIsraeli military said that Hezbollah, with Iranian assistance,had been bringing specialised equipment to a weapons factorynear the Bekaa village of al-Nabi Sheet with a view to settingup a production line for precision-guidance missiles.
Hezbollah recently moved some of the equipment to "civilianlocations" in Beirut as a precaution against strikes, theIsraeli military statement said, alluding to tensions thatsurged after the Aug. 25 drone incident in Beirut's suburbs.
There was no immediate comment from Hezbollah, which hasdenied having precision-guided missile production sites inLebanon. But it says it possess such weapons, which could beused to home in on and knock out key Israeli infrastructure.
In an Aug 31 speech, Hezbollah leader Sayyed HassanNasrallah accused Israel of using the movement's capability withprecision-guided missiles as a pretext for attacks.
Israel has not formally claimed responsibility for theBeirut drone strike, which a regional security source said hit acomponent of the precision-guided missile project.
Hoping to move Beirut to rein in Hezbollah, Israel hassignalled that in any further flare-up it could carry outwidespread attacks on Lebanon.(Writing by Dan Williams, Editing by William Maclean)