Israel hit Islamic Jihad targets in Gaza for a second day on Wednesday and Palestinian militants launched hundreds of rockets across the border, setting off sirens as far away as Tel Aviv, while Egypt began efforts to mediate an end to the fighting.
The second round of cross-border fire in a week came after Israel launched strikes on Tuesday against three Islamic Jihad commanders it said had planned attacks against Israelis, following months of escalating violence.
Cairo, which has mediated in previous rounds of fighting, had begun brokering a ceasefire, Islamic Jihad spokesman Dawoud Shehab said.
Israel was examining Egypt's proposals, Foreign Minister Eli Cohen told public broadcaster Kan.
Prime Minister Benjamin Netanyahu said in broadcast remarks that Islamic Jihad had sustained a serious blow, but cautioned: "The campaign is not over yet."
The Israeli military said it hit more than 130 targets, including rocket-launching sites, as blasts sounded across the Palestinian enclave.
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