Exchanges of fire triggered by Israel's targeted killing of a top Islamic Jihad commander in Gaza raged for a second day Wednesday and showed little sign of easing, with 22 Palestinians killed.
Fresh rocket barrages were fired at Israel, which responded with strikes on what it said were Jihad militant sites and rocket-launching squads in the Gaza Strip.
Air raid sirens wailed and fireballs exploded as air defense missiles intercepted rockets, sending Israelis rushing to bomb shelters.
In Gaza, residents surveyed damage and mourned the dead outside a mortuary and at funerals.
UN envoy Nickolay Mladenov was expected in Cairo for talks on halting the fighting, a diplomatic source said, but a source close to the discussions warned the risk of further escalation remained high.
In comments Wednesday morning, Israeli Prime Minister Benjamin Netanyahu said the Jihad must stop its stop rocket attacks or "absorb more and more blows".
He reiterated his warning that "this could take time" and said Israel would respond to attacks "without mercy."
Jihad spokesman Musab al-Barayem said the group was not interested in mediation for now as it responded to the killing of one of its commanders.
Israel killed senior Jihad commander Baha Abu al-Ata and his wife Asma in a targeted strike early Tuesday, prompting barrages of rocket fire in revenge and retaliatory Israeli air strikes.
According to Israel, Ata was responsible for rocket fire at Israel as well as other attacks and was planning more violence, with the military calling him a "ticking bomb."
The flare-up raised fears of a new conflict between Israel and Palestinian militants in Gaza, who have fought three wars since 2008.
A total of 22 Palestinians have been killed so far, including Ata and his wife, according to Gaza's Hamas-run health ministry.
Jihad confirmed that the dead included other members of its armed wing.
Since Israel's killing of Ata in what was believed to be a drone strike, at least 220 rockets have been fired into Israel from Gaza and dozens have been intercepted by air defenses, according to the army.
There have been no Israeli deaths, though damage has been caused and one rocket narrowly missed cars on a busy highway.
Israeli medics said they had treated 48 people with light wounds, while schools were closed in areas near the Gaza border for a second day running.
On Tuesday, school closures included the commercial capital Tel Aviv.
Schools in the blockaded Gaza Strip, an enclave of two million people, have been closed since Tuesday.
Unusually and in a sign it was seeking to avoid a wider conflict, Israel's announced targets were confined to Jihad sites and not those belonging to Hamas.
It normally holds Hamas, the movement that rules the Gaza Strip, responsible for all rocket fire from the enclave as the territory's de facto rulers.
Israeli analysts were quick to highlight the change of approach.
"For the first time in the current era, Israel drew a distinction between Hamas and Jihad," commentator Ben Caspit wrote in Israeli newspaper Maariv.
"By so doing, Israel deviated from its iron-clad principle that Hamas, as the sovereign power in Gaza, has to pay the price for any action taken by anyone in the Gaza Strip. That is now no longer the case."
Jihad is the second most-powerful armed group in the Gaza Strip after Hamas.
The flare-up comes at a politically sensitive time for Israel.
A September 17 general election ended in a deadlock and a new government is yet to be formed.
It was the second election since April, when polls also ended inconclusively.
The violence drew international calls for calm.
Britain's foreign office said "we call on all sides to rapidly de-escalate the situation, and support the UN and Egyptian efforts to achieve that objective."