* Both sides largely observe deal reached after violence kills 25 in Gaza
* Egypt official: "sides agreed to end current operations"
* Netanyahu vows response to any truce violations (Adds Netanyahu comments, truce largely holding)
By Nidal al-Mughrabi
GAZA, March 13 (Reuters) - An Egyptian-brokered truce between Israel and militant groups in the Gaza Strip was largely observed on Tuesday after four days of violence in which 25 Palestinians were killed and 200 rockets were fired at Israel.
The number of Palestinian rocket attacks dropped sharply after the deal took effect overnight, with less than 10 rockets reportedly fired since then. In a further sign of a return to normality, towns and cities in southern Israel announced plans to reopen schools that had been kept shut for the past three days.
Prime Minister Benjamin Netanyahu signalled Israel's commitment to the deal, while warning of a strong response to any violations.
"Our message is that quiet will bring quiet," Netanyahu said in a Jerusalem speech. "Anyone who violates it or even tries to violate it, our guns will find him."
The worst flare-up of violence along the restive frontier in months began on Friday after Israel killed a senior militant it accused of plotting to attack Israel from Egyptian territory.
Israel said Gaza militants had fired about 200 rockets at its southern towns and cities from Gaza since then. Eight Israelis were injured by the rockets. At least 80 Palestinians, mostly civilians, were wounded in Israeli attacks.
Previous ceasefire deals after earlier rounds of fighting have often got off to a slow start, with guns gradually falling silent within a day or two. In this case, militants fired nine mortars and rockets in the hours after the deal took effect, causing no damage or injury.
A rocket struck harmlessly after nightfall near the city of Ashkelon, shattering a six-hour calm but provoking no immediate response. Israel has not launched any air strikes at the Hamas-ruled coastal territory since the deal was done.
A senior Egyptian security official in Cairo told Reuters by phone that both sides had agreed "to end the current operations", with Israel agreeing to "stop assassinations" and an overall deal "to begin a comprehensive and mutual (period of) calm".
The truce agreement followed appeals from the United States, the United Nations, France, the European Union and the Arab League for both sides to exercise restraint.
'IRON DOME' SYSTEM PROTECTS ISRAEL
"We expect this ceasefire to continue but we cannot be sure so our forces...are ready to continue if it will end up being necessary," Israeli Defence Minister Ehud Barak, visiting southern Israel, told reporters.
"It was quite a successful round," he said, citing the deaths of 20 militants among the 25 Palestinians killed in Israeli attacks and what he termed the "impressively effective" Iron Dome rocket interception system.
The anti-missile batteries destroyed dozens of incoming rockets, but the barrages disrupted normal life for more than a million Israelis in the south, forcing schools to close and people to run for cover when sirens sounded.
Gaza's Hamas Islamist leadership has kept out of the fighting and seemed eager to avoid a larger conflict with Israel.
"If Israel is committed to the agreement, we also will be committed to it," said Khaled al-Batsh, a senior leader of Islamic Jihad which, along with the Popular Resistance Committees, was most active in the fighting.
NO APPETITE FOR PROLONGED CONFLICT
While Israel was keen to prevent rocket fire, there seemed to be little public enthusiasm for waging a longer military campaign reminiscent of a 2008-2009 offensive in which 1,400 Palestinians and 13 Israelis were killed.
Gaza, home to 1.7 million people, was under Israeli occupation from 1967 until 2005 and remains under blockade.
Radical Islamist group Hamas has controlled Gaza since seizing it from West Bank-based Palestinian President Mahmoud Abbas in 2007. It has shunned the stalled peace process supervised by international powers and refuses to recognise Israel.
Violent flare-ups have been frequent between Israel and Gaza's militant factions in the past few years, in most cases lasting no longer than a week.
The last conflagration of this intensity was in August after a cross-border attack launched from Egypt killed eight people in Israel and Israel struck back killing 15 Gaza gunmen. (Reporting by Nidal al-Mughrabi; Writing by Allyn Fisher-Ilan; Editing by Andrew Osborn)
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