Rockets hit Haifa, nine Israelis killed:

Waves of warplanes thundering through the darkness bombed Beirut’s southern suburbs for hours early Sunday, and Hezbollah rocket attacks killed at least nine people in Israel’s third largest city. A barrage of rockets pounded the northern Israeli city of Haifa in the worst strike on Israel since violence broke out along the border with Lebanon last week. One of the rockets hit a storage room at the train station, killing nine people, Israeli police said. Many more people were wounded. Some of the rockets landed near an oil refinery and gas storage tanks. Rockets also hit the northern towns of Acco and Nahariya, and residents were told to head to bomb shelters. Israeli Prime Minister Ehud Olmert warned there would be “far-reaching consequences” for the rocket attack.

Iran warned Israel of “unimaginable losses” if Israel strikes Syria:

Iran warned its arch-enemy Israel of “unimaginable losses” if it attacks Syria and vowed that it was standing by the Syrian people.
“We hope the Zionist regime does not make the mistake of attacking Syria, because extending the front would definitely make the Zionist regime face unimaginable losses,” foreign ministry spokesman Hamid Reza Asefi told reporters.
“Iran is standing by the Syrian people,” he said of the Islamic republic’s sole regional ally.
“We have offered and will offer Syria and Lebanon spiritual and humanitarian support,” Asefi insisted, reiterating Iran’s denial that it is providing military and financial assistance to the Hezbollah movement.
The Israeli army has said Hezbollah militants had used an Iranian-built radar-guided anti-ship missile in an attack on Friday on an Israeli warship off Lebanon’s coast.

And Syria vows to respond directly:

AMASCUS: Syria on Sunday warned it would respond directly and by all means necessary to any Israeli attack on its territory, in its first official reaction to Israel’s offensive on neighbouring Lebanon.
“Any Israeli attack against Syria will provoke an unlimited, direct and firm response using all means necessary,” Information Minister Mohsen Bilal said, according to the official SANA news agency.
Damascus-ally Iran also warned arch-enemy Israel of unimaginable losses if it attacks Syria and vowed that it was standing by the Syrian people.

And all the while, Israel intensifies bombings in Lebanon and the Lebanese Prime Minister may send in the army to try to contain Hezbollah which has its own risks:

BEIRUT, Lebanon – Waves of warplanes thundering through the darkness bombed Beirut’s southern suburbs for hours early Sunday, a day after Israel stepped up its air strikes and tightened a noose around this reeling nation.
The Israeli air force on Saturday hit strongholds of the Hezbollah Shiite Muslim guerrilla group, bombed central Beirut for the first time, and pounded seaports and a key bridge. Then, after midnight and until 2:30 a.m., about 18 powerful explosions rocked southern Beirut, where Hezbollah is headquartered and much of the air assault has been aimed since cross-border hostilities erupted Wednesday.
Israeli jets could be heard over the city, much of it darkened because airstrikes have knocked out power stations and the fuel depots feeding them.
Hezbollah’s TV aired footage showing two long columns of smoke rising from buildings into the night sky. Much of Shiite-populated southern Beirut was deserted, its residents having fled east to Lebanon’s Bekaa Valley.
Trying to defuse the violence, which began when Hezbollah captured two Israeli soldiers and killed eight others in a cross-border raid, Lebanon’s prime minister indicated he might send his army to take control of southern Lebanon from Hezbollah _ a move that might risk civil war.