KIRYAT SHMONA, Israel (AP) _ Aside from four cafes, there was only one business open in this town hard- hit by rocket fire - a television repair shop.

''I have lots of business,'' said proprietor Yehiel Abukrat, shrugging.

In this northern Israeli town where barrages of Katyusha rockets fired by Lebanese guerrillas since Sunday have driven several thousand residents into bomb shelters, televisions are the only distraction from the fear.

''You don't function, there's no routine,'' said Dafna Hazan, watching a TV in a bomb shelter. ''There was never a war in which we were so helpless. This is no life.''

Two Kiryat Shmona residents have died in the barrages, which guerrillas of the Islamic fundamentalist movement Hezbollah launched in retaliation for Israeli jet and artillery bombardments.

At least 53 people have been reported dead and 290 wounded, most of them Lebanese, since Israeli jets, helicopters, gunboats and howitzers began striking at suspected guerrilla bases across Lebanon on Sunday.

The United Nations said more than 335,000 other Lebanese have fled their homes and headed north since Israel launched the operation.

The raids retaliated for an escalation in guerrilla attacks on Israeli troops in the Jewish state's so-called ''security zone'' in southern Lebanon. Two militia groups that have vowed to wreck the U.S.-sponsored Middle East peace process have killed seven Israeli soldiers and wounded seven in the zone in attacks beginning July 8.

In Kiryat Shmona, Hazan sleeps on a steel bunk-bed in the shelter with her two small children. Seven other families also live in the shelter, built for a 32-apartment building. The 24 other families have fled south, as have about half the town's 23,000 people.

''My husband said we should go,'' Hazan said, ''But I couldn't leave my elderly parents alone.''

By contrast, Shlomo and Ilana Edry, waiting in an otherwise deserted station for a bus to Tel Aviv, were about to follow their children and grandchildren who had already gone.

''We're no heroes, said Edry, 65.

''It's not the war,'' his wife said. ''It's the routine of tension, of being in the shelter - it's the thought of it.''

She patted a small overnight bag, ''We'll be back soon.''

Outside the bus station, the sunny streets were deserted, except for a few soldiers and three agents of the Habad revivalist Jewish religious movement urging moments of prayer.

Days-old newspaper swept by the town's only supermarket, which was closed. Signs advertising roast chicken leaned against the shuttered doors of a restaurant, across the square from neatly stacked patio chairs.

''Why chase people away?'' asked Maggie Azoulay, the owner of one of four cafes that stubbornly refused to shut down.

''Ten years ago during the Lebanon war, they brought over comedians, they had activities for the kids.''

Now, Azoulay lamented her only trade was a side business in lottery tickets - but that was booming.

''All the other lottery outlets shut down,'' she said. ''People will always play the lottery.''

A convoy of large cars rolled by - Prime Minister Yitzhak Rabin was touring the town, followed by an entourage of security men and press photographers.

As dusk settled, police vans patrolled the town warning residents to enter their shelters. The two dead men were outside when the rockets hit.

The town center, in quieter times brisk with the business of summer evening strollers, shut down entirely down to the last cafe.

Residents settled down to evening viewing, many watching the local ''security channel,'' which interrupts its broadcasts with news of the latest attack.

A young woman, a recent immigrant from the former Soviet Union, approached the video lending library ready to exchange three cassettes.

She knocked on the door, but there was no response. ''It hasn't been open for business since Sunday morning,'' she sighed and turned and walked away.