Israel has warned it could "significantly widen" a Gaza land offensive but was cautioned by its main ally, the United States, about the risks of further escalation as Palestinian civilian deaths mounted.
Palestinian officials said 65 Palestinians, at least 15 of them under the age of 18, had been killed since Israel sent ground forces on Thursday into the densely-populated enclave of 1.8 million Palestinians.
The Israeli army said it killed 17 Palestinian gunmen and took 13 prisoners in operations inside the Gaza Strip. One Israeli soldier was killed and several others injured.
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In all, 307 Palestinians have been killed since fighting began on July 8, Gaza officials said. Most of the dead were civilians, of whom more than 50 were under the age of 18. About 2,260 other people have been injured.
Israel said 150 targets, including 21 rocket launchers and four tunnels, had been attacked overnight.
US president, Barack Obama, said on Friday he had spoken to Benjamin Netanyahu, the Israeli prime minister, about "the risks of further escalation" and the loss of innocent lives.
However, he emphasised Washington's support for Israel to defend itself.
"We are hopeful that Israel will continue to approach this process in a way that minimises civilian casualties," Obama said.
At an emergency session of the UN Security Council on Friday, UN political affairs chief Jeffrey Feltman condemned rocket fire into Israel but voiced alarm at "Israel's heavy response".
The Israeli advance followed 10 days of barrages against Gaza from air and sea, rockets fired by Hamas into Israel and failed attempts by Egypt to secure a truce.
Rockets continued to be fired on Friday against southern Israel and Tel Aviv area, police said. Many were intercepted by the Iron Dome anti-missile system, and no casualties were reported.
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"We chose to start this operation after we exhausted other options and reached the conclusion that without it we could pay a much higher price," Netanyahu said in Tel Aviv.
"The main goal is to restore quiet.
"My instructions ... to the Israeli army, with the approval of the security cabinet, is to prepare for the possibility of a widening, a significant widening of the ground operation."
Gaza residents said Israeli forces had moved several hundreds metres into the north of the enclave and their deployment in the south of the territory was slightly deeper.
Hamas said its men were hitting Israeli tanks with mortar rounds and setting off bombs against troops crossing under smokescreens.
Israel said it was calling up 18,000 military reservists, adding to the 30,000 already mobilised.
Abu Ubaida, spokesman for Hamas' armed wing, said it had thousands of fighters "waiting to join the battle".