In Bint Jbail, a border town that was the scene of heavy ground battles between guerrillas and Israeli soldiers, an entire swath of the town center was flattened and rows of cars sat incinerated in the streets. An Israeli tank was parked on the road outside the town.

In Beirut, street life cautiously returned. Traffic was heavier and some stores reopened.

Thousands of vehicles, meanwhile, crept south along bomb-blasted highways. At a key intersection, traffic was backed up for more than a half mile as police tried to direct vehicles around bomb craters.

Many parts of southern Lebanon have been virtually deserted for weeks after a wave of refugees headed north to escape the fighting.

Similar scenes took place in northern Israel, which had been hit by more than 4,000 Hezbollah rockets that forced people to flee or huddle in bomb shelters. Some Israelis cautiously tried to sample small bits of normal life: shopping for groceries or taking a stroll in the sun after weeks in shelters.

"People are still scared," said Haim Biton in the hard-hit Israeli border town of Kiryat Shemona. "You don't know what is going to happen."

A bank employee, Shoshi Bar-Sheshet, predicted it could a while before people breath easy. "The city is still in a coma," she said.

Both Hezbollah and Israel claimed they had come out ahead in the conflict.

Hezbollah distributed leaflets congratulating Lebanon on its "big victory" and thanking citizens for their patience during the fighting, which began July 12 when guerrillas killed three Israeli soldiers and captured two others in a cross-border raid.

Israeli Foreign Ministry spokesman Mark Regev said Hezbollah's "state within a state" had been destroyed, along with its ability to fire at Israeli soldiers across the border.

Peretz said that as a result of the war Islamic extremists have been weakened, opening a window for negotiations with Lebanon and for renewing talks with Palestinians.

Lebanon said nearly 791 people were killed since the fighting began. Israel said 116 soldiers and 39 civilians were killed in fighting or from Hezbollah rockets.

The violence raged until the final minutes.

Israeli warplanes struck a Hezbollah stronghold in eastern Lebanon and a Palestinian refugee camp in the south, killing two people, and Israeli artillery pounded targets across the border through the night.

The airstrikes continued until 15 minutes before the truce went into force, destroying an antenna for Hezbollah's Al-Manar television southeast of Beirut.

Early Monday, Israeli aircraft dropped leaflets on Beirut, warning it will retaliate against any attack launched on it from Lebanon.

One leaflet said Hezbollah serves the interests of its Iranian and Syrian patrons and has "brought destruction, Lebanon against the State of Israel." Addressed to Lebanon's citizens, it said: "Will you be able to pay this price again?"