Hamas indirectly accused Israel on Friday of engineering the killing of an Italian Palestinian peace activist in Gaza in order to intimidate other foreign activists hoping to sail to Gaza as part of the next flotilla.

"Such an awful crime cannot take place without arrangements between all the parties concerned to keep the blockade imposed on Gaza," Hamas leader Mahmoud Zahar said at a rally held by the group to honor executed Italian activist Vittorio Arrigoni.

Open gallery view In this Wednesday, Oct. 29, 2008 photo, Palestinian activist Vittorio Arrigoni carries an aid box from the 'Free Gaza' boat in Gaza city. Credit: AP

He added that foreign activists like Arrigoni were "our friends" and promised that the perpetrators would be punished.

The body of Arrigoni was found hanged in a Gaza apartment just hours after he was abducted by an al-Qaida-inspired group, Hamas said early Friday, in the first kidnapping of a foreigner since the militant Hamas overran the coastal strip nearly four years ago.

Hamas officials said police stormed an apartment in Gaza City where Arrigoni was being held by members of a small Islamic group that had kidnapped him on Thursday. Arrigoni was dead and the apartment was otherwise empty, the officials said.

In Rome, the Italian Foreign Ministry said the killing was a "barbaric murder and a vile and irrational gesture of violence on the part of extremists indifferent to the value of a human life."

The Islamic group, calling itself Monotheism and Holy War, had released a video on Thursday showing the kidnapped activist blindfolded and with cuts on his face, held in front of the camera by a fist gripping his hair. The group demanded that Hamas free its leader and two other jailed members and said it would execute the captive if the demand was not met.

Despite the video, the group released a statement on Friday denying it was responsible for Arrigoni's death.

The abduction highlighted challenges that Hamas - an Iran-backed group with a militant Islamist ideology, considered a terrorist organization by the U.S., the European Union and Israel - has faced from smaller Islamic factions in Gaza who see Hamas as too pragmatic and lenient. Some of these, including the one apparently behind Arrigoni's abduction, are inspired by al-Qaida and the world jihad movement.

Arrigoni came to Gaza as a pro-Palestinian activist in 2008. According to a press release from his organization, the International Solidarity Movement, he had been monitoring human rights violations by Israel, supporting the Palestinian popular resistance against the Israeli occupation and disseminating information about the situation in Gaza to his home country of Italy.

Kidnappings of foreigners in Gaza took place with some regularity before Hamas took control of the territory in 2007. All were eventually released unharmed.

There had been no abductions since Hamas took power.

One of the leaders of the International Solidarity Movement, Huweida Arraf, condemned Arrigoni's senseless killing.

"Vittorio was really loved in Gaza," she said. "I didn't think there was even a 1 percent chance they would kill him. It was a complete shock."

"The ISM has no immediate plans to pull its volunteers out of Gaza," she said.

Hamas said two people were arrested in another location in connection with the killing, and a third was being sought.

In a statement, the Hamas Interior Ministry said Arrigoni's captors killed him shortly after he was abducted midday Thursday. Salama Marouf, a Hamas government spokesman, said the killing was an act against the humanity and against the custom and tradition of the Palestinian people.

Al-Qaida-inspired groups like the one that appeared to be behind Arrigoni's killing have clashed with Hamas in the past. The Brussels-based International Crisis Group said in a report last month that the groups follow a strict interpretation of Islamic law and see themselves not as liberators of Palestine but as part of a global movement of armed fighters defending Muslims against non-Muslim enemies.

Hamas' relations with the jihadi groups, according to the same report, have shifted from cooperation to antagonism.

Hamas' rivals from the Western-backed Palestinian government in the West Bank, the Palestinian Authority, condemned the killing. Saeb Erekat, the chief Palestinian negotiator, called Arrigoni's death a despicable and ugly crime.

Journalists were not allowed to see the body in the morgue and could not independently confirm the cause of death given by Hamas. An Italian doctor was on his way from Israel to examine the body, a Hamas official said.

Arrigoni was a well-known figure in Gaza, frequently clenching a pipe between his teeth and wearing a beret emblazoned with a likeness of Che Guevara, as well as bracelets in the red, black, green and white colors of the Palestinian flag.

He was an outspoken critic of Israel, but in an interview with The Associated Press in 2008 he also criticized Muslim extremists for trying to impose a hardline version of Islam in Gaza. He said he hoped the presence of Western volunteers like him would help liberalize Gazan society.

Arrigoni's organization, the International Solidarity Movement, operates in the West Bank and Gaza. Its volunteers protest against Israel and interfere with the operations of the Israeli military.

In 2003, an American ISM activist, Rachel Corrie, was struck by an Israeli military bulldozer in a combat zone in southern Gaza while trying to block its path. A British activist with the group was fatally shot by an Israeli soldier in the same area that year. A third ISM activist, a Palestinian, was shot and killed by Palestinian militants in the West Bank town of Jenin in 2007.