Israel and Gaza militants traded more heavy fire Thursday, the third day of the worst escalation of violence in months that has killed 28 people in the blockaded Palestinian enclave and one in Israel.
Air strikes by the Israeli army since Tuesday have killed fighters as well as civilians, including several children, said officials in the crowded coastal territory.
Rocket fire from Gaza killed one person in the central Israeli city of Rehovot and injured at least two others, Israeli police said.
Cairo mediated in efforts toward a truce between Israel and the Islamic Jihad militant group, while the European Union called for an immediate ceasefire.
"We urge an immediate comprehensive ceasefire which will end Israeli military operations in Gaza and current rocket firing against Israel, which is unacceptable," EU foreign policy chief Josep Borrell said in a statement.
German Foreign Minister Annalena Baerbock hosted her French and Jordanian counterpart for talks in Berlin and said "the bloodletting must end now".
Militants in the Gaza Strip have fired 547 rockets at Israel since Wednesday, the military said, adding that 175 had been intercepted by the Iron Dome missile defence system.
Shops in Gaza were shuttered and the streets largely abandoned as Israeli military aircraft circled over the territory where several buildings lay in ruins.
Islamic Jihad confirmed it has lost five military leaders in strikes in recent days, including Ahmed Abu Deka — the deputy of Ali Ghali, commander of a rocket launch unit also killed by Israel on Thursday.
The Israeli army said it had fired at 166 targets across Gaza on Thursday.
The militant group, the Popular Front for the Liberation of Palestine, said four of its fighters had been killed.
Israeli Defence Minister Yoav Gallant said he had instructed the security establishment "to take all the measures necessary, to prepare additional actions and maintain readiness for the possibility of increased fire".
'Wave of escalation'
In Gaza City's Al-Rimal district, Mamoun Radi, 48, said: "We hope that the wave of escalation will end, but we support revenge for the martyrs.
"Israel assassinated a leader of (Islamic) Jihad at dawn today because it does not want calm."
Across southern Israel, sirens wailed intermittently through the night and on Thursday morning.
Also read: Four children among 12 Palestinians killed in Israeli strikes
Miriam Keren, 78, an Ashkelon resident, said a Gaza rocket had destroyed a workshop and damaged her house.
"All the shrapnel is in the room; the house was shaken very powerfully, the glasses fell, the walls were damaged," she told AFP.
"Luckily I have a safe room and I entered it immediately and closed the door.
"This isn't the first time the house was hit but I'm not afraid, neither was I yesterday. You're shocked for a moment but it's not about fear. It's more unpleasant, very unpleasant."
An Islamic Jihad source said senior member Mohammad al-Hindi, who heads the group's political bureau, arrived Thursday in Cairo for talks with Egyptian intelligence officials.
An Egyptian source meanwhile told AFP a security delegation from Cairo would be in Tel Aviv later Thursday for talks with Israeli officials on a ceasefire.
Israeli officials confirmed Egypt's involvement in attempts to facilitate understandings between the sides toward halting the hostilities.
On Thursday, US ambassador to Israel Tom Nides said "we stand by Israel's right to defend itself", adding that Washington was engaged in efforts "towards a quick deescalation".
Both Hamas, which rules Gaza, and Islamic Jihad are considered terrorist groups by Israel and the United States.
This week's Gaza clashes are the worst since a three-day escalation in August killed 49 Palestinians, with no Israeli fatalities.
Violence has also flared in the occupied West Bank, where the Israeli army has staged repeated raids against militants which have often flared into street clashes or gun battles.
On Thursday, two Palestinians died from their wounds after being shot by the Israeli army in a raid the day before in the West Bank city of Qabatiya, the Palestinian health ministry said.
The conflict has escalated since veteran leader Benjamin Netanyahu returned to power late last year, heading a coalition with extreme right and ultra-Orthodox parties.
Netanyahu has warned the militants, saying "we see you everywhere, you cannot hide, and we choose the place and time to hit you".