GAZA CITY, Palestinian Territories (AFP) - Israel and Palestinian militants resumed fire across the Gaza border on Tuesday, sparking panic across the war-torn enclave and halting truce talks.
Gaza emergency services said that a woman and a child were killed and 16 people injured in one strike in Gaza City.
Another eight people were hurt in earlier air raids across the strip, they said.
An Israeli military statement said that at least eight rockets were fired at Israel, with six falling on open ground and two more being intercepted by missile defences.
The rocket fire began several hours before a 24-hour truce was to expire, prompting Israel to order its negotiators back from ceasefire talks in Cairo and launch a new round of air strike on Gaza.
They hit at least 10 targets, according to army radio.
The fighting shattered nine days of relative quiet in the skies over Gaza and cast a dark shadow over Egyptian-mediated efforts to hammer out a longer-term truce.
"There has been no progress," Azzam al-Ahmed, the chief Palestinian negotiator in Cairo said on Tuesday. "Matters have become more complicated."
A statement from Hamas spokesman Fawzi Barhum accused Israeli Prime Minister Benjamin Netanyahu of deliberately obstructing truce efforts and said that the militant Islamist movement would now "examine all options in the light of developments in the situation... and facts on the ground."
But Israel's US ally put the blame squarely on the group itself.
"Hamas has security responsibility for Gaza... Rocket fire came from Gaza," State Department spokeswoman Marie Harf said.
"As of right now, with today's developments, we are very concerned and it is our understanding the ceasefire has broken down."
The renewal of Israeli air strikes spread panic among Gaza residents.
An AFP reporter saw hundreds of Palestinians streaming out of Shejaiya, an eastern area of Gaza City which has been devastated by more than a month of fighting between Israel and the militant Islamist Hamas movement.
More poured out of the Zeitun and Shaaf areas, alarmed by a series of explosions and heading to shelter in UN schools, local witnesses said.
An Israeli official said the country's negotiating team had been ordered back from Cairo where Egypt has been pushing for a decisive end to the Gaza bloodshed, which has killed more than 2,000 Palestinians and 67 on the Israeli side.
"The Cairo process was based on the premise of a total ceasefire," another official told AFP. "If Hamas fires rockets, the Cairo process has no basis."
The army said that it has ordered that public bomb shelters within 40km of the Gaza border, be opened ready for use.
Israel has vowed not to negotiate under fire, and Netanyahu has warned there would be "a very strong response" to any resumption of rocket attacks.
In Gaza, Hamas spokesman Sami Abu Zuhri denied the Islamist movement had fired rockets over the border, accusing Israel of trying to wreck the truce talks.
"We don't have any information about firing rockets from Gaza. The Israeli raids are intended to sabotage the negotiations in Cairo," he told AFP.
The Cairo talks centre on an Egyptian proposal that meets some of the Palestinian demands, such as easing Israel's eight-year blockade on Gaza, but puts off debate on other thorny issues until later.
Amnesty International renewed an appeal for access to Gaza.
"Valuable time has already been lost and it is essential that human rights organisations are now able to begin the vital job of examining allegations of war crimes," it said.
The Palestinians say agreement over a long-term arrangement in Gaza has been delayed by Israeli foot-dragging over key issues.
Israel wants Gaza demilitarised although the subject does not figure in the Egyptian proposal as seen by AFP.
Hamas had repeatedly warned it would not extend the temporary ceasefire, pressing for immediate gains that would allow it to claim concessions from Israel after the devastating war which began on July 8.
Egypt's proposal calls for both sides to immediately cease fire and includes provisions relating to opening the borders to allow for free movement of people, goods and construction materials, as well as a clause on regulating the economic crisis within the impoverished enclave.
But crucially, it postpones discussions on issues such as a port and airport for another month, until "after calm and stability returns," along with talks over exchanging the remains of two Israeli soldiers for the release of Palestinian prisoners.
Jordan's national carrier, Royal Jordanian, announced it had resumed flights to Tel Aviv on Sunday, after suspending them for a month due to rocket fire hitting near the runway of Israel's main airport.
Rocket attacks had prompted major US and European airlines to halt flights to Israel for several days in July over safety fears.