Israel, Palestinian trade deadly fire over Gaza as death toll rises to 21

Israel's army and Gaza militants traded heavy cross-border fire Wednesday, with 22 Palestinians killed over two days amid the worst escalation of violence to hit the coastal territory in months.

Sirens in the Tel Aviv area and Israel's south warned of incoming rockets, with an AFP reporter observing launches from Gaza as Israeli officials said Egypt was working on a possible truce with the militant Islamic Jihad.

Smoke billowed from the densely populated coastal enclave after Israel announced it was targeting rocket launch sites of the Islamic Jihad.

Israeli defence minister Yoav Gallant noted over 400 launches from Gaza late Wednesday, as the Islamic Jihad said Palestinian "resistance" was keeping up its fire.

A home and car were hit by rockets in the southern Israeli cities of Ashkelon and Sderot, Israeli officials said, with the army announcing a series of new strikes on the blockaded Gaza Strip.

Gaza's health ministry said seven people were killed, a day after Israeli strikes on the Palestinian territory left 15 dead.

Four of those killed Wednesday were fighters with the Popular Front for the Liberation of Palestine, the group said.

Late Wednesday, prime minister Benjamin Netanyahu said Israel was "still in the midst of the campaign," noting that "no Israeli civilian has been wounded up to now".

The Israeli-Palestinian conflict has escalated since Netanyahu's latest coalition, including extreme right and ultra-Orthodox parties, took office in December.

It has come against the backdrop of Israel's biggest domestic crisis in decades around now-shelved judicial reforms proposed by the government of Netanyahu, himself on trial for corruption he denies.

Earlier, an Israeli official had told AFP on condition of anonymity that Egypt was "trying to facilitate a ceasefire".

Sources in Gaza close to the Islamic Jihad and Hamas confirmed Egyptian efforts to secure a truce, without providing further details.

The latest violence comes a day after Israeli strikes on Gaza killed three top Islamic Jihad militants and 12 others, including four children, according to a health ministry toll.

Israeli Foreign Minister Eli Cohen told public broadcaster Channel 11 late Wednesday the Islamic Jihad were "begging for a ceasefire".

Islamic Jihad had vowed Tuesday to retaliate, with Israel warning its residents near the border to stay near bomb shelters.

Ahead of Wednesday's exchange of fire, Gaza's usually bustling shops were closed.

People in Gaza "expect the worst", said resident Monther Abdullah.

"Everyone feels anxious and people aren't on the street much. I definitely feel like there's a war coming," the 50-year-old told AFP.

In Tel Aviv, Odelia Abromovitch said the rocket fire at her city was "scary."

"It's one of the first times I hear a siren in Tel Aviv," she said. "But this is the situation we live in."

The latest violence comes on the second anniversary of a devastating 11-day war fought between Gaza militants and Israel.

Hamas spokesman Abdul Latif al-Qanou said Wednesday "the strikes of the unified resistance are part of the process of responding to the massacre committed by (Israel)."

Both Hamas and Islamic Jihad are considered terrorist organisations by Israel and the United States.

Among those killed Tuesday were four children and three senior Islamic Jihad operatives.

The top militants were named as Jihad Ghannam, Khalil al-Bahtini and Tareq Ezzedine, a Gaza-based militant leader in the West Bank.

Earlier Wednesday, Israeli troops raided the West Bank town of Qabatiya, killing two people whom the army accused of firing at soldiers.

The Palestinian health ministry identified the two men as Ahmed Jamal Tawfiq Assaf, 19, and Rani Walid Ahmed Qatanat, 24.

Israel has occupied the West Bank since the Six-Day War of 1967 and its forces regularly operate in Palestinian cities.

The Arab League on Wednesday condemned the "aggressive (and) barbaric Israeli raids on the Gaza Strip, which targeted civilians, children and women in residential neighbourhoods".

Germany meanwhile "strongly" condemned the "indiscriminate" Palestinian rocket attacks on Israel, which it said must "stop immediately."

This weeks' Gaza violence is the worst since a three-day escalation in August killed 49 Palestinians, with no Israeli fatalities.

While Hamas has fought multiple wars with Israel in recent years, the group stayed on the sidelines of last year's conflict fought between Israel and Islamic Jihad.

The latest violence brings to 132 the number of Palestinians killed in the Israeli-Palestinian conflict so far this year.

Nineteen Israelis, one Ukrainian and one Italian have been killed over the same period, according to an AFP count based on official sources from the two sides.

These figures include combatants as well as civilians, and, on the Israeli side, three members of the country's Arab minority.