The Israeli military has rushed additional forces to its southern border with the Gaza Strip, vowing to halt a growing wave of rocket fire from the Palestinian territory.
The move came as new clashes erupted in east Jerusalem in response to the death of an Arab boy who Palestinians say was killed by Israeli extremists.
Israel said the show of force on the Gaza border was a defence measure. But persistent rocket fire raised the prospects of a tough Israeli response, with the military saying more than 40 rockets or mortar shells were fired from Hamas-controlled Gaza today.
Tensions have been high since three Israeli teenagers were abducted in the West Bank on June 12, sparking a massive manhunt that ended with the discovery of their bodies early this week.
Israel has blamed Hamas for the abductions and launched a crackdown on the Islamic militant group in the West Bank, drawing rocket attacks out of Gaza and Israeli air strikes in a near-daily cycle of retaliation.
The situation deteriorated further after the burned body of a Palestinian youth, whose identity was confirmed as Mohammed Abu Khdeir, was found in a forest after he was seized near his home in east Jerusalem. The Palestinians accused Israeli extremists of killing the teenager in a revenge attack over the deaths of the Israeli youths.
Israeli prime minister Benjamin Netanyahu tried to calm the situation, condemning Abu Khdeir's killing and vowing to find the attackers.
"We don't know yet the motives or the identities of the perpetrators, but we will. We will bring to justice the criminals responsible for this despicable crime whoever they may be," Mr Netanyahu said in a speech celebrating US Independence Day at the American Embassy in Tel Aviv. "Murder, riots, incitement, vigilantism, they have no place in our democracy."
Following an especially intense barrage of rocket fire, including two projectiles that hit homes in the southern Israeli town of Sderot, Israel sent tanks, artillery and ground forces to the border area.
Peter Lerner, an Israeli military spokesman, called the move "defensive" and said he hoped the rocket fire would halt.
"Everything we are doing is to de-escalate the situation but on the other hand be prepared for actions that can develop if they do not de-escalate," Mr Lerner said.
Israel has launched two large-scale operations in Gaza in recent years in response to rocket fire on its south, most recently in 2012. The fighting ended in a ceasefire.
The Israeli military said 34 of the rockets or mortar shells exploded inside Israel while the rest blew up prematurely inside Gaza or were shot down.
Four rockets were fired out of Gaza just before nightfall, with one striking Sderot and the others landing in open areas, the army said. The barrage forced a Channel 10 TV reporter to cut off a live broadcast, and scramble into a shelter for cover, but no injuries were reported.
In all, Palestinian militants have fired roughly 130 rockets toward Israel in recent weeks, according to the Israeli military. The air force has responded with air strikes on some 70 targets in Hamas-controlled Gaza.
In Gaza, two senior Hamas officials said the group has "no interest" in any kind of escalation and hoped the ceasefire could be restored. But they warned that rocket fire would continue until Israel halts its attacks on Gaza.
"Israel has been attacking Gaza since the kidnapping of the teens," one official said. "Once Israel stops attacking Gaza, we are willing to immediately preserve the truce."
Israel has blamed Hamas for the deaths of the three teenagers. Hamas has praised the abduction, but has denied responsibility.
In east Jerusalem, meanwhile, masked Palestinian youths clashed with Israeli security forces for a second straight day in a burst of anger over the death of Abu Khdeir. Protesters lit tyres, and standing behind a large garbage bin, hurled stones at Israeli security forces. Police responded with stun grenades but largely kept their distance. No injuries were reported.
Clashes were much heavier the previous day, when rioters torched three light-rail train shelters, leaving city streets covered in stones and debris. Train service to Arab neighbourhoods of east Jerusalem remained out of service.
Palestinians believe that Israeli extremists abducted Abu Khdeir and killed him to avenge the deaths of the Israeli youths, whose bodies were found in a field in the West Bank on Monday after a more than two-week search.
A day before Abu Khdeir's disappearance, hundreds of right-wing Israeli youths marched through central Jerusalem, chanting "Death to Arabs" and vowing revenge. Police said they were still trying to determine the motive for the killing.
In the east Jerusalem neighbourhood of Shuafat, Abu Khdeir's family set up a mourning tent and distributed posters mourning his death. The posters showed his child-like face and described him as a "brave martyr".
Relatives said they expected to receive the body back from an Israeli forensics lab tomorrow afternoon, when they planned a funeral.
Police spokesman Micky Rosenfeld said the police presence would be heavy in east Jerusalem as the funeral would also coincide with the first Friday prayer services of the Muslim fasting month of Ramadan.
The events have sparked a debate in Israel over whether hard-line Israelis have incited hatred - and perhaps even been responsible for Abu Khdeir's death as the Palestinians allege.
A number of photos also have appeared on social media with Israelis urging revenge.
In one picture, a young man wearing an Israeli military uniform postures with a gun and the word "revenge" scrawled on his chest. In another two young women posed with signs reading "Hating Arabs is not racist. It is moral." The Israeli military said it had sentenced four soldiers to 10-day jail terms for posting inappropriate material on Facebook.
Palestinians expressed similar sentiments mocking the disappearance of the three Israeli teenagers last month.