Despite international calls for restraint, the death toll over the past two days rose to 33. These included an Israeli man, whose death from a rocket attack on Wednesday was the first such killing since May. Among the Palestinian dead were a baby and four boys who medical staff said were playing soccer.
It is the bloodiest phase of the conflict in months and a spokesman for Palestinian President Mahmoud Abbas accused Israel of trying to wreck a new U.S.-backed peace process ahead of a visit next week by U.S. Secretary of State Condoleezza Rice.
As Israeli Prime Minister Ehud Olmert and other officials sent out mixed signals on whether there might be a full-scale ground offensive, Gaza residents said troops raided homes in the south and tanks were seen inside the border in the north. Blasts rocked Gaza City and militants fired at Israeli helicopters.
Three people were wounded in Israel on Thursday and the security minister, visiting the area, had to scramble for cover.
The Islamist Hamas, which won a parliamentary election in 2006 and seized control of Gaza last June by routing Abbas's secular forces, called for "Rage Rallies" across the Muslim world after Friday prayers "to condemn Israeli massacres."
Hamas's armed wing said it fired 90 rockets in two days, many at the Israeli border town of Sderot whose population it called "occupiers" who should leave the region.
Rice, who met Olmert in Tokyo, would not be drawn on whether she had joined calls for him not to use "disproportionate force" but said Hamas must stop the rockets. Some of those hit the city of Ashkelon, an escalation that saw the use of Soviet Katyusha missiles with a longer range than locally improvised weapons.
PEACE TALKS
Abbas's spokesman Nabil Abu Rdainah said in a statement: "The Israeli government ... aims to destroy the peace process."
Abbas reopened talks with Israel after Hamas seized control of Gaza in June. Though he shares Israel's hostility to Hamas, the suffering of the 1.5 million people blockaded in Gaza has angered Palestinians in the occupied West Bank, undermining support for his drive for a deal to create a Palestinian state.
Olmert said the "continuous shooting of Qassam rockets against uninvolved, innocent civilians is a major threat to the stability" of contacts with Abbas's Palestinian Authority.
Washington hopes those talks can result in a statehood deal this year but Palestinians have complained about the slow pace.
Asked about the four boys, aged 10 to 15, who were killed on Thursday, the Israeli army said it had targeted a rocket squad. In another strike, on a van laden with soft drinks and snacks, it killed a munitions maker for a group allied to Hamas.
At least 11 of the 20 killed on Thursday were militants. The bloodshed took to 66 the number of Gazans killed by Israelis in February, passing the 62 deaths in January.
Though many of the dead were gunmen, Palestinians and Israel's critics say the toll shows a disproportionate response to rocket fire that has caused few casualties in Israel while nonetheless badly disrupting life in border towns and villages.
Amid an Israeli outcry over Wednesday's death of a father of four, a Foreign Ministry spokesman said the rocket attacks "may leave us no choice" but to send in troops. Israeli forces quit Gaza in 2005 and have since mounted only brief raids.
"The Palestinians are bringing this on themselves, because many Palestinians will be hurt. There will be no other choice ... We will act," said Deputy Defense Minister Matan Vilnai.
But Olmert, certainly aware an invasion could mean many more casualties both among his troops and Palestinian civilians, sounded more cautious. "We are at the height of the battle," he said in Tokyo. But he added it was a "long process."
The European Union condemned Hamas but said it "urges Israel to show restraint and refrain from all activities contrary to international law." In particular it called for an end to Israel's tight blockade on goods and services to Gaza.
One missile struck a police post near the home of Hamas leader Ismail Haniyeh, who was Abbas's prime minister until June. Though Israel has said it may resume strikes on top Hamas leaders, the attack did not appear to target Haniyeh.
(Additional reporting by Arshad Mohammed and Tova Cohen in Tokyo and Dan Williams, Ori Lewis and Avida Landau in Jerusalem; writing by Jeffrey Heller and Alastair Macdonald in Jerusalem, editing by Ralph Gowling)
