Israel's military said it is expanding its operations in southern Gaza and is battling Hamas with snipers and tank fire in the Khan Younis area.
The UN has warned 150,000 people in central Gaza have nowhere to go after being urged to leave.
At least 35 people were killed and dozens injured after Israeli air strikes hit residential buildings in central Gaza overnight.
Israel's military said it regretted causing unintended harm to civilians in airstrikes at a refugee camp on December 24, in a rare acknowledgment of fault.
Hezbollah said it launched more attacks on northern Israel, as tension grows between Israel and Lebanon over the Iran-backed paramilitary group's clashes with Israeli troops.
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