Elad and his girlfriend Hadas check to see if the latest hip Tel Aviv establishment has a proper shelter in case of a sudden air siren -- and only then look at the menu before deciding on a restaurant.

"It is the (1991) Gulf War all over again except that these rockets are no longer called SCUDS," said 20-something Elad as he walked hand-in-hand with Hadas along the city's bustling Mediterranean seafront.

"But the people refuse to admit it," Hadas chipped in. "People like sipping their coffees at outdoor cafes and really do not want to change their lifestyles. It is a slow process in Tel Aviv, this change."

Israel's city that never sleeps is a playground whose party spirit was first shattered two decades ago during the first US campaign in Iraq.

But this week, militants from Gaza, who are locked in a deadly struggle with the Israeli military, fired two rockets at the city, both of which landed in the sea.

Neither caused any casualties, but they made a big splash, especially the one which fell in the water just 200 metres (yards) from the US embassy, sparking panic among beach-goers.

Gaza militants have long claimed to have missiles capable of reaching Tel Aviv, but until now, they have never put them into use.

The short-range rockets that have been falling by the hundreds on southern Israel can easily be assembled in Gaza -- a territory ruled by Hamas but which is also home to other, even more militant Islamist branches.

But rockets that can fly more than 50 kilometres (30 miles) are widely believed to have been produced in Iran, although Hamas on Friday claimed to have developed one with a 75-kilometre range (45 miles) which was fired at Tel Aviv.

How all these political consideration play out on the streets of Tel Aviv will help in large part to decide the fate of Israel's upcoming elections on January 22 and that of its rightwing government headed by Prime Minister Benjamin Netanyahu.

Jerusalem also came under fire from Gaza militants for the first time ever on Friday, with one rocket landing just outside the city.

Several hours later, the defence ministry said it would station a fifth battery of its Iron Dome anti-missile system in the metropolitan Tel Aviv area, which press reports said would counter rockets fired at both cities.

It was expected to be operational by Saturday night.

The mood at this stage wavers between a furious refusal to believe that anything has changed, and calls for Netanyahu to order in troops and tanks into Gaza as soon as possible.

"I was not scared at all," said a car park attendant called Dana Alosh.

"What does it matter to me? If the rocket gets us -- well, it gets us. But in the mean time, we sing and dance just like before."

But her friend -- a burly native Russian who looks after a small convenience store across the street -- grumbled "kill all the Arabs" before walking away with a shake of the head.

Even 47-year-old Flora had a few words of militant encouragement for Netanyahu as she leisurely walked her dog while hiding behind huge chic sunglasses.

"It is okay by me if we go in (to Gaza) now," said Flora with a vigorous nod.

"There is no longer an alternative -- we have to live and talk and walk and things like this."

Several people did admit surprise at Tel Aviv suddenly falling within the militants' range. But few wanted to openly express shock or fear -- the mood instead being almost mournful over a city stripped of its innocence.

"Everyone we know says that they have been looking to see where their bomb shelters are," said Elad as his girlfriend broke into a laugh.

"That is what they say," Hadas explained.

"It is the cool thing to do -- to say that I hid in a bomb shelter. But I do not think that people really do that. It will be a while before they become really afraid."

Elad listened to Hadas and paused. "There is a certain anxiety in the air," he concluded. "Let us just call it that."