Israeli airstrikes flattened homes in Gaza and Palestinian rocket barrages into southern Israel persisted for a second day, raising fears of another major escalation in the Mideast conflict.
Gaza's health ministry said 24 people had been killed so far in the coastal strip, including six children.
The fighting began with Israel's killing of a senior commander of the Palestinian Islamic Jihad militant group in a wave of strikes Friday that Israel said were meant to prevent an imminent attack.
So far, Hamas, the larger militant group that rules Gaza, appeared to stay on the sidelines of the conflict, keeping its intensity somewhat contained.
Israel and Hamas fought a war barely a year ago, one of four major conflicts and several smaller battles over the last 15 years that exacted a staggering toll on the impoverished territory's 2 million Palestinian residents.
Whether Hamas continues to stay out of the fight likely depends in part on how much punishment Israel inflicts in Gaza as rocket fire steadily continues.
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The Israeli military said an errant rocket fired by Palestinian militants killed civilians late Saturday, including children, in the town of Jabaliya, in northern Gaza.
The military said it investigated the incident and concluded without a doubt that it was caused by a misfire on the part of Islamic Jihad. There was no official Palestinian comment on the incident.
A Palestinian medical worker, who was not authorized to brief media and spoke on condition of anonymity, said the blast killed at least six people, including three children.
Earlier on Saturday, Israeli warplanes struck four residential buildings in Gaza City, all locations apparently linked to Islamic Jihad. There were no reports of casualties. In each case, the Israeli military warned residents ahead of the strikes.
Another strike on Saturday hit a car, killing a 75-year-old woman and wounding six other people.
In one of the strikes, after the warnings, fighter jets dropped two bombs on the house of an Islamic Jihad member. The blast flattened the two-story structure, leaving a large rubble-filled crater, and badly damaged surrounding homes.
Women and children rushed out of the area.
Warned us? They warned us with rockets and we fled without taking anything, said Huda Shamalakh, who lived next door. She said 15 people lived in the targeted home.
Among the 24 Palestinians killed were six children and two women, as well as the senior Islamic Jihad commander.
The Gaza Health Ministry said more than 200 people have been wounded. It does not differentiate between civilians and fighters. The Israeli military said on Friday that early estimates were that around 15 fighters were killed.
The lone power plant in Gaza ground to a halt at noon Saturday for lack of fuel as Israel has kept its crossing points into Gaza closed since Tuesday.
With the new disruption, Gazans can get only 4 hours of electricity a day, increasing their reliance on private generators and deepening the territory's chronic power crisis amid peak summer heat.
Throughout the day, Gaza militants regularly launched rounds of rockets into Israel. The Israeli military said on Saturday evening that nearly 450 rockets had been fired, 350 of which made it into Israel, but almost all were intercepted by Israel's Iron Dome missile-defence system. Two people suffered minor shrapnel wounds.
One rocket barrage was fired toward Tel Aviv, setting off sirens that sent residents to shelters, but the rockets were either intercepted or fell into the sea, the military said.
Sunday could be a critical day in the flare-up, as Jews mark Tisha B'av, a sombre day of fasting that commemorates the destruction of the biblical temples.
Thousands are expected at Jerusalem's Western Wall, and Israeli media reported that the Israeli leadership was expected to allow lawmakers to visit a key hilltop holy site in the city that is a flashpoint for violence between Israelis and Palestinians.
On Friday evening, Israeli Prime Minister Yair Lapid said in a televised speech that Israel isn't interested in a broader conflict in Gaza but will not shy away from one either.
The violence poses an early test for Lapid, who assumed the role of caretaker prime minister ahead of elections in November, when he hopes to keep the position.
Lapid, a centrist former TV host and author, has experience in diplomacy having served as foreign minister in the outgoing government, but has thin security credentials.
A conflict with Gaza could burnish his standing and give him a boost as he faces off against former Prime Minister Benjamin Netanyahu, a security hawk who led the country during three of its four wars with Hamas.
Hamas also faces a dilemma in deciding whether to join a new battle barely a year after the last war caused widespread devastation.
There has been almost no reconstruction since then, and the isolated coastal territory is mired in poverty, with unemployment hovering around 50 per cent. Israel and Egypt have maintained a tight blockade over the territory since the Hamas takeover in 2007.
Egypt on Saturday intensified efforts to prevent escalation, communicating with Israel, the Palestinians and the United States to keep Hamas from joining the fighting, an Egyptian intelligence official said.
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