Israel and Gaza's Hamas rulers traded fire and ceasefire proposals with threats to escalate their border conflict as no deal appeared near.
An Israeli air strike targeting a Gaza media centre killed a senior militant and engulfed the building in flames, while Gaza fighters fired 95 rockets at Israel, nearly one-third of them intercepted by an Israeli missile shield.
A total of 38 Palestinians were killed yesterday. Two more Palestinians were killed in air strikes past midnight, bringing the death toll since the start of Israel's offensive to 111, including 56 civilians. Around 840 people have been wounded, including 225 children, Gaza heath chiefs said. Three Israeli civilians have been killed and dozens wounded.
Over the weekend, civilian casualties in Gaza rose sharply after Israel began targeting the homes of what it said were suspected militants. Two such strikes late yesterday killed five people - a father and his four-year-old twin sons in northern Gaza and two people in the south, medics said.
Jamal Daloo, who lost his wife, a son, four grandchildren and five other members of his family in an attack on Sunday, sat in quiet mourning yesterday next to the ruins of his home, his face streaked with tears.
"The international public opinion witnessed the facts," he said, speaking as his 16-year-old daughter Yara was still missing under the rubble being cleared away by bulldozers. "This does not require my words."
Egypt, the traditional mediator between Israel and the Arab world, was at the centre of a flurry of diplomatic activity yesterday. Egyptian intelligence officials met separately in Cairo with an Israeli envoy and with Khaled Mashaal, the top Hamas leader in exile.
Hamas wants Israel to halt all attacks on Gaza and lift tight restrictions on trade and movement in and out of the territory that have been in place since Hamas seized Gaza by force in 2007. Israel demands an end to rocket fire from Gaza and a halt to weapons smuggling into Gaza through tunnels under the border with Egypt.
With positions far apart on a comprehensive deal, some close to the negotiations suggested Egypt was first seeking a halt to fighting before other conditions were discussed.
Mashaal said Hamas would agree to a ceasefire only if its demands were met. "We don't accept Israeli conditions because it is the aggressor," he said. "We want a ceasefire along with meeting our demands."
Mashaal also suggested that Israel's threat of invading Gaza was simply a ploy. He said Israeli prime minister Benjamin Netanyahu "is waving the threat of a ground offensive and asking the world to pressure Egypt, Turkey and Qatar, so they pressure Hamas".
"He wants to negotiate with us under fire to impose his conditions, pretending he is acting from a position of strength," Mashaal added.
Israeli leaders have repeatedly threatened to widen the offensive, saying an invasion is an option. Israel has amassed troops on the Gaza border and begun calling up thousands of reservists.
But an Israeli official emphasised that Israel hopes to find a diplomatic solution.
"We prefer the diplomatic solution if it's possible. If we see it's not going to bear fruit, we can escalate," he said. He added that Israel wanted international guarantees that Hamas would not rearm or use Egypt's Sinai region, which abuts Gaza, for militant activity.
As part of global efforts to end the Gaza fighting, United Nations chief Ban Ki-moon arrived in Cairo yesterday and will meet Israel's president Shimon Peres today.
The UN Security Council held closed-door consultations at the request of Russia, whose ambassador Vitaly Churkin later accused one country of foot-dragging, implying it was the US.
Germany's foreign minister was also heading to the region for talks with Israeli and Palestinian leaders. Turkey's foreign minister and a delegation of Arab League ministers are visiting Gaza today.
Hamas, an offshoot of the region-wide Muslim Brotherhood, is negotiating from a stronger position than four years ago, when Israel launched a three-week war on the militants in Gaza.
At that time, Hamas was internationally isolated; now, the Muslim Brotherhood is in power in Egypt and Tunisia, and Hamas is also getting political support from Qatar and Turkey.
US president Barack Obama and other Western leaders have blamed Hamas for the latest outbreak of fighting, saying Israel has a right to defend itself against rocket attacks. However, they have also warned Israel against sending ground troops into Gaza, a move that would probably lead to a sharp increase in the Gaza death toll.
Over the years, Israeli governments have struggled to come up with an effective policy towards Hamas, which is deeply rooted in Gaza, a densely-populated territory of 1.6 million.
Hamas has fired more than 1,000 rockets at Israel since the start of the latest offensive on Wednesday, kicked off by Israel's assassination of the Hamas military chief.
Of the 95 rockets fired Monday, 29 of them intercepted by Israel's US-financed Iron Dome anti-missile battery, police spokesman Micky Rosenfeld said. Rockets landed in open areas of the southern cities of Beersheba, Ashdod and Ashkelon, and caused damage in a number of areas, including an empty school building in Ashkelon.
BACKGROUND TO GAZA CONFLICT
With little notice, Israel has launched a blistering air offensive against the Gaza Strip's ruling Hamas militant group. Here is a look at why the violence erupted, the goals of the warring sides and how it may end.
Israel opened its offensive with a surprise air strike on November 14 that killed the shadowy leader of Hamas' military wing.
Since then it has carried out hundreds of air strikes in what it says is a systematic campaign to halt years of rocket attacks launched from Gaza. While Israel claims to have inflicted heavy damage, dozens of rockets have continued to fly out of Gaza each day.
Israel launched the operation in response to days of rocket attacks out of Gaza, highlighted by a rare missile strike on an Israeli military vehicle that wounded four soldiers. But the operation was actually years in the making.
Since a previous Israeli offensive four years ago, Hamas has restocked its arsenal with more sophisticated and powerful weapons smuggled in from Egypt through underground tunnels.
After a lull following Israel's previous offensive, rocket fire has steadily climbed the past two years. The Israeli military says more than 700 rockets were launched into Israel this year before it launched the offensive last week. In this environment, Israeli officials have said it was only a matter of time before a new round of fighting broke out.
Hamas seized control of Gaza, a densely populated strip of land sandwiched between southern Israel and Egypt's Sinai desert, five years ago from the rival Fatah movement of Palestinian President Mahmoud Abbas. Hamas, a militant group sworn to Israel's destruction, has developed is rocket arsenal to the point where nearly half of Israel's population is in range.
WHY FIRE ROCKETS?
Palestinian militants, led by Hamas, say the rocket fire is a legitimate response to continued Israeli attacks. They also claim they are resisting Israeli occupation of the territory. Israel withdrew from Gaza in 2005, ending a 38-year military occupation. But it has maintained a blockade of the territory in a step it says is needed to prevent arms smuggling.
In the murky world of Gaza politics, the attacks also stem from internal rivalries between groups eager to prove their militant credentials. Israeli prime minister Benjamin Netanyahu says no country would tolerate repeated missile attacks on its civilians.
Prolonged fighting carries great risks for both sides. As Israel presses forward, the number of Palestinian civilian casualties is likely to rise - a scenario that could quickly turn international opinion against it. Israel's previous offensive left hundreds of civilians dead, drawing international condemnation and war crimes accusations. By continuing to fire rockets, Hamas raises the risk of tougher Israeli attacks, including a possible ground offensive. Well aware of these risks, both sides are working through mediators to arrange a cease-fire.
TERMS OF THE DEAL
Israel wants a halt to the rocket attacks and an end to arms smuggling into Gaza, most likely in a deal that is guaranteed by Egypt or other international parties. Hamas wants a halt to Israeli assassinations of its leaders and a lifting of the Israeli blockade.
While gaps remain wide, both sides have strong interests in a deal. Bringing quiet to Israel's embattled south will make Mr Netanyahu a national hero, weeks before parliamentary elections. Hamas, branded a terrorist group by Israel and the West, has seen its influence grow as the Arab Spring brings Islamists to power across the region.
A ceasefire, particularly an arrangement guaranteed with international partners, would cement Hamas' control of Gaza and give it more of the international recognition it covets so much.
BY THE NUMBERS
More than 100 Palestinians, half of them civilians, have been killed, according to Palestinian medical officials. Three Israeli civilians have died from rocket fire.
Israel has attacked more than 1,350 targets in the current offensive, according to the Israeli army. Hamas and smaller armed groups have responded with nearly 600 rockets, the army says.
Israel says its new "Iron Dome" rocket-defence system has shot down more than 300 incoming projectiles.