GAZA CITY, Palestinian Territories (AFP) - At least 17 people were killed in an Israeli strike on a packed Gaza market on Wednesday in a raid that came as Israel observed a four-hour humanitarian lull in some sectors.
Thick black smoke billowed over the site in the war-torn Shejaiya neighbourhood as at least five ambulances raced to the scene where bodies lay strewn on the ground, an AFP correspondent said.
At least 17 people were killed and 200 wounded in the strike, medics said, on a day that saw at least 110 people killed and the death toll from 23 days of unrelenting Israeli attacks soar to 1,360.
Hamas said later it fired rockets at Tel Aviv and the southern port city of Ashkelon "in response to the Jabalia and Shejaiya massacres", referring to the market and the earlier fatal shelling of a UN school in the north of the strip.
The Israeli military said that a rocket hit open ground "in the Tel Aviv area" and another two were intercepted over Ashkelon.
It said that a total of 119 rockets fell in Israel on Tuesday, with another six shot down by missile defences.
It was supposed to have been a rare pause for Gaza's battered population of 1.8 million to go out in safety to stock up on supplies, and for medics to evacuate the dead and wounded.
Instead, there was further bloody mayhem with more than 30 people killed across Gaza in the first three hours of the lull alone.
Israel had said its truce, which began at 1200 GMT, would not apply in places were troops were "currently operating", hours after the army made what it called a "significant advance" into the narrow coastal strip.
Hamas denounced the four-hour lull as a publicity stunt, saying it had "no value".
The market strike came hours after Israeli tank shells slammed into a UN school in Jabalia refugee camp which was sheltering some 3,300 homeless Gazans, killing 16 and drawing a furious response from the United Nations.
"This morning, a UN school sheltering thousands of Palestinian families suffered a reprehensible attack," UN chief Ban Ki-moon said on a visit to Costa Rica.
"It is unjustifiable, and demands accountability and justice."
The attack was also denounced by the White House in a carefully worded statement that avoided mentioning Israel.
"The United States condemns the shelling of a UNRWA school in Gaza, which reportedly killed and injured innocent Palestinians, including children, and UN humanitarian workers," a statement said.
In Paris, a French presidency statement said President Francois Hollande agreed with Ban's assessment of the attack as "unjustifiable".
Rights group Amnesty International urged Washington to halt arms supplies to Israel.
"It is time for the US government to urgently suspend arms transfers to Israel and to push for a UN arms embargo on all parties to the conflict," it said in a petition to US Secretary of State John Kerry.
"They're bombing houses, homes, schools - there's no protection," said Moin al-Athamna, who was at the school when the attack occurred.
It was the second time in a week that a school run by the UN agency for Palestinian refugees was hit, prompting a blistering attack on Israel by United Nations Relief and Works Agency (UNRWA) commissioner-general Pierre Krahenbuhl.
"I condemn in the strongest possible terms this serious violation of international law by Israeli forces," he said, indicating the school's location had been communicated to the Israeli army 17 times.
"No words to adequately express my anger and indignation," he wrote on his official Twitter account, describing it as "intolerable".
In Israel, the army said three soldiers were killed in Gaza, raising the overall number of soldiers killed to 56 since the operation began on July 8.
Situated on the Mediterranean coast, flanking Israel and Egypt, the Gaza Strip covers an area of just 362 square kilometres.
It is one of the most densely populated areas in the world.
But there appeared to be no Israeli appetite for a truce, despite an hours-long meeting of the security Cabinet, with a senior official telling Haaretz newspaper that the Jewish state was not even close to a ceasefire.
"When a ceasefire proposal that answers Israel's important needs is laid on the table, it will be considered," he said, warning that the military operation would expand.
"The Israel Defence Forces will expand attacks against Hamas and the rest of the terror organisations." Despite the rhetoric, a two-member Israeli delegation arrived in Cairo late Wednesday to discuss a possible ceasefire with Egyptian officials, an official at the airport told AFP, saying they were expected to leave after several hours.
Cairo, a key mediator in previous truce negotiations between Israel and Hamas, was also expected to host a Palestinian delegation later this week.