Blood on the rocks by Israel-Lebanon tripwire

"There were only two or three shots," said an Israeli military spokeswoman. "They were standing there, where the blood is."

The battalion commander was hit in the head and a fellow officer struck in the chest and gravely wounded from a range of about 700 meters, she told Reuters at the scene of the brief battle.

Israeli artillery fire, launched in retaliation at a Lebanese army post, left scorched hillsides on the Lebanese side of the steep valley that divides them.

The most serious incident since the July 2006 war between Israel and the Lebanese Shi'ite movement Hezbollah -- which lasted 34 days and cost 1,200 lives on the Lebanese side and 158 Israeli dead -- led to the deaths of the Israel colonel and two Lebanese soldiers, along with a journalist on the Lebanese side.

The Israeli officer was in serious condition.

Like the ceasefire line between the two Koreas, this tense frontier laced with electronic sensor fences and studded with minefields has left a tripwire for a potentially open-ended Middle East war.

Israel says Hezbollah, allied to Iran, has at least 40,000 rockets deployed close to the front line, in range of Israeli population centers such as the city of Kryat Shmona.

The United States expressed "serious concern" over Tuesday's battle, and the United Nations appealed for restraint on both sides.

In the aftermath on Tuesday afternoon, white armored personnel carriers of the 13,000-strong UNIFIL peacekeeping force, manned by Indonesian troops with blue UN flags, patrolled the highway that marks the demarcation "Blue Line".

Israeli troops scanned the scarred hillside through binoculars, watched by television crews on the Lebanese side two hundred meters away, and observed by what Israeli soldiers said were Hezbollah spotter teams on the road just opposite.

NOT FAR AWAY

The distance separating the two is short enough to allow a shouted conversation.

"The sniper fire probably came from one of those buildings over there," the Israeli military spokeswoman said, indicating unfinished concrete-built homes on the opposite slope.

"We are sure it came from the Lebanese armed forces."

The exchange began when the Israelis moved a cherry-picker crane next to their warning fence behind the demarcation line in order to trim a tree, whose branches were tripping the fence's electronic anti-infiltration devices.

Notice of this operation was given well in advance to UNIFIL and to the Lebanese army, the Israeli military said. It was begun in broad daylight, with Israeli media filming and photographing when the shots were fired.

The sniper attack came as a complete surprise, like an ambush, Israeli military sources said.

Israel Defense Forces Northern Commander General Gadi Eisenkot called it a deliberate provocation.

A senior Israeli military source said he had been contacted by senior Lebanese army officers as shooting erupted, trying to tell them that firing had not been authorized.

Israeli analysts speculated that a renegade army unit sympathetic to Hezbollah had launched the attack.

The Lebanese army, however, said an Israeli patrol had violated the demarcation line, even though U.N. peacekeepers in the area told it to stop.

The Israeli army said the pre-advertised tree-trimming took place within 100 meters (yards) of a permanent UNIFIL post, where a yellow Hezbollah flag flutters above the trees.

The Lebanese army said its forces repelled the Israelis "using rocket propelled grenades. A clash happened in which the enemy forces used machine guns and tank fire targeting army posts and civilian houses," it said.

The United States said the accounts were confusing.

(Additional reporting by Mariam Karouny and Yara Bayoumy in Beirut; Editing by Jon Hemming)