The rocket hit the top floor of the building in Kiryat Malachi
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Three people have been killed as rockets fired from Gaza struck southern Israel, amid escalating violence.
They died when a four-storey building in the town of Kiryat Malachi was hit.
It marks the first Israeli fatalities since Israel killed Hamas' military chief in Gaza on Wednesday.
Eleven Palestinians - mainly militants but also children -
have been killed in the ensuing Israeli operation. Since then, more than
130 rockets have been fired into Israel, police say.
Hundreds of rockets were fired into Israel by militants in
Gaza, and Israel carried out numerous air strikes as cross-border
violence soared in recent weeks.
Israel said the head of Hamas' military wing, Ahmed Said
Khalil al-Jabari, who died when his car was hit in Gaza City, was
responsible for all attacks from Gaza in the past decade.
“Start Quote
If the shooting doesn't stop, Israel will also target [Hamas leader] Ismail Haniyeh”
Israel Katz
Israeli Transport Minister
Hamas militants have been running Gaza since 2007.
In a separate development, Palestinian leader Mahmoud Abbas
reportedly cut short his trip to Switzerland and was returning to his
base in the West Bank to deal with the growing crisis.
'Gates of hell'
The three Israelis - two women and a man - died when a rocket
hit the top floor of the building in Kiryat Malachi, about 25km (15
miles) north of Gaza.
Three other people - a four-year-old boy and two babies - were injured, Israel's foreign ministry said.
The building's residents were warned by sirens about the
impending attack, but did not have enough time to flee the building,
reports said.
Meanwhile, three Palestinian militants were killed in Israeli air strikes on Thursday, Palestinian medics said.
After a relatively quiet night, violence picked up again in the morning the BBC's Jon Donnison in Gaza City says.
He says vapour trails from rockets being fired by Palestinian
militants can be seen, and intermittently large mushrooms of smoke
appear from Israeli air strikes.
Reports in Israel's media say that a rocket hit a house in
Ashdod without causing injuries and another rocket landed close to a
school in Beer Tuvya. There were also reports of rockets landing in
Ofakim and Ashkelon.
Hamas on Thursday said it had fired missiles at Tel Aviv -
but the claim was denied as "psychological propaganda" by the Israel
Defence Forces.
The BBC's Jon Donnison says Gaza have been filled the sounds of militant rockets taking off and Israeli missiles landing
So far the violence does not appear on the same scale as the
last Gaza war almost four years ago when hundreds of Palestinians were
killed on the first day of Israel's operation, our correspondent adds.
Thirteen Israelis also died in that conflict.
Israeli Prime Minister Benjamin Netanyahu has warned that his country is prepared to extend its operation against Hamas.
Israeli Defence Ministry spokesman Joshua Hantman told the
BBC that about one million Israelis across the country were now under
fire from the militants.
He added that a ground offensive was "an option if we need to".
Meanwhile, Israeli Transport Minister Israel Katz told the
BBC that "if the shooting doesn't stop, Israel will also target [Hamas
leader] Ismail Haniyeh".
Responding to Wednesday's strike, Hamas warned that the killing of 52-year-old Jabari would "open the gates of hell" for Israel.
In Gaza City, large crowds gathered for his funeral, vowing revenge attacks.
Among those killed in the Israeli air strikes in the last two
days was the 11-month-old son of a BBC Arabic Service cameraman in Gaza
City. The child, Omar, died in hospital of severe burns, while his
brother and uncle remain critically injured