Israel claimed its forces had killed two "senior Hamas operatives" this evening after a day of fire exchanged between Israel and Gaza.
It came as Israel's cabinet authorised the mobilisation of up to 75,000 reserve troops, preparing the ground for a possible Gaza invasion after Palestinians fired a rocket toward Jerusalem for the first time in decades.
- International Correspondent John Irvine: 'Not even Saddam dared fire on Jerusalem'
Tel Aviv, Israel's commercial centre, also came under rocket attack for the second straight day, in defiance of an Israeli air offensive that began on Wednesday with the declared aim of deterring Hamas from launching cross-border attacks that have plagued southern Israel for years.
- Video report by International Correspondent John Irvine in Tel Aviv:
Hamas, the Islamist group that runs the Gaza Strip, claimed responsibility for firing at Jerusalem and Tel Aviv.
Israel said the rocket launched toward Jerusalem landed in the occupied West Bank, and the one fired at Tel Aviv did not hit the city. There were no reports of casualties.
Hours earlier, Egypt's prime minister, denouncing what he described as Israeli aggression, visited Gaza and said Cairo was prepared to mediate a truce.
- Video report by Middle East Correspondent John Ray in Gaza:
Officials in Gaza said 29 Palestinians - 13 militants and 16 civilians, among them eight children and a pregnant woman - had been killed in the enclave since Israel began its air strikes. Three Israeli civilians were killed by a rocket on Thursday.
The Israeli military said 97 rockets fired from Gaza hit Israel on Friday and 99 more were intercepted by its Iron Dome anti-missile system. Dozens of Israeli bombing raids rocked the enclave, and one flattened the Gaza Interior Ministry building.
In a further sign Netanyahu might be clearing the way for a ground operation, Israel's armed forces announced that a highway leading to the territory and two roads bordering the enclave of 1.7 million Palestinians would be off-limits to civilian traffic.
Tanks and self-propelled guns were seen near the border area on Friday, and the military said it had already called 16,000 reservists to active duty.
Netanyahu is favourite to win a January national election, but further rocket strikes against Tel Aviv, a free-wheeling city Israelis equate with New York, and Jerusalem, which Israel regards as its capital, could be political poison for the conservative leader.
Netanyahu said before the rocket attacks on the two cities:
Asked about Israel massing forces for a possible Gaza invasion, Hamas spokesman Sami Abu Zuhri said: "The Israelis should be aware of the grave results of such a raid, and they should bring their body bags."