The Israeli military said on Monday it had called up an unprecedented 300,000 reservists and was imposing a total blockade of the Gaza Strip, in a sign it may be planning a ground assault in response to the devastating weekend attack by Hamas gunmen.
After hours of intense bombardment by Israeli jets, Hamas, the Islamist movement that controls Gaza, said it would execute an Israeli captive for every Israeli bombing of a civilian house without warning.
Inside Israel, Palestinian fighters were still holed up in several locations, two days after they killed hundreds of Israelis and seized dozens of hostages in a raid that shattered Israel's reputation of invincibility.
Israeli TV channels said the death toll from the Hamas attack had climbed to 900, with at least 2,600 injured. Gaza's Health Ministry said at least 687 Palestinians had been killed and 3,726 wounded in Israeli air strikes on the blockaded enclave since Saturday.
The dead included citizens of Italy, Ukraine and the United States, where President Joe Biden announced on Monday that at least 11 Americans had been killed.
Hamas spokesman Abu Ubaida said the group had been acting in accordance with Islam by keeping the Israeli captives safe but issued the threat to kill civilians and broadcast it.
Echoing Hamas, the Islamic Jihad armed wing, which said it was holding more than 30 Israelis, asked Israel to refrain from hitting civilians if it cared about the fate of Israelis in its custody.
In Gaza, as Israel conducted intense retaliatory strikes, Defence Minister Yoav Gallant drew international condemnation by announcing a tightened blockade to prevent food and fuel from reaching the strip, home to 2.3 million people.
"Depriving the population in an occupied territory of food and electricity is collective punishment, which is a war crime," Omar Shakir, Israel and Palestine Director at Human Rights Watch, said in a statement.
The Israeli air strikes became more aggressive as night fell, and witnesses said several Hamas security headquarters and ministries were hit. The strikes destroyed some roads and houses.
Israel also bombed the headquarters of the private Palestinian Telecommunication Co., which could affect landline telephone, internet and mobile phone services.
As it rained, explosions and lightning lit the skies, and the sound of bombings mixed with thunder.
In a further signal of Israel's rapid shift to a war footing, a cabinet member from Prime Minister Benjamin Netanyahu's Likud Party said it could set up a national unity government joined by opposition leaders within hours.
Netanyahu told mayors of southern towns hit by Saturday's surprise assault that Israel's response would "change the Middle East."
At the Jabalia refugee camp in northern Gaza, men clambered onto a pancaked building to pull an infant's tiny body from the rubble, carrying it down through the crowd below amid still-smoldering remains of bombed buildings.
That air strike killed and wounded dozens, according to the territory's health ministry.
UN Secretary-General Antonio Guterres said some 137,000 people were taking shelter with UNRWA, the UN agency that provides essential services to Palestinians.
FIGHTING SPREAD
The prospect that fighting could spread to other areas alarmed the region. Israeli troops "killed a number of armed suspects that infiltrated into Israeli territory from Lebanese territory," the military said, adding helicopters "are currently striking in the area."
Lebanese armed group Hezbollah fired a salvo of rockets onto northern Israel on Monday in response to at least three of its members being killed in Israeli shelling on Lebanon.
In Israel's south, scene of the Hamas attack, Israel's chief military spokesman said troops had re-established control of communities inside Israel that had been overrun, but isolated clashes continued as some gunmen remained active.
The shocking images of the bodies of hundreds of Israelis sprawled across the streets of towns, gunned down at an outdoor dance party and abducted from their homes were like nothing seen before in the decades-old Israeli-Palestinian conflict.
The announcement that 300,000 reservists had been activated in just two days added to speculation that Israel could be contemplating a ground assault of Gaza, a territory it abandoned nearly two decades ago.
"We have never drafted so many reservists on such a scale," chief military spokesperson Rear-Admiral Daniel Hagari said. "We are going on the offensive."
Palestinians reported receiving calls and mobile phone audio messages from Israeli security officers telling them to leave areas mainly in the northern and eastern territories of Gaza, and warning that the army would operate there.
Hamas, which calls for Israel's destruction, says its attack was justified by the plight of Gaza under a 16-year-old blockade and the deadliest Israeli crackdown for years in the occupied West Bank.
'A TOTAL MASSACRE'
Mainstream Palestinian groups who deplored the attacks said the violence was nonetheless predictable, with a peace process frozen for nearly a decade and far-right Israeli leaders talking of annexing Palestinian land once and for all.
Israel and Western countries said nothing justified the intentional mass killing of civilians.
The attackers gunned down scores of young Israelis at the desert dance party - media reported 260 killed there. A day later dozens of survivors were still emerging from hiding. The site was littered with wrecked and abandoned cars.
"It was just a massacre, a total massacre," said Arik Nani, who had been celebrating his 26th birthday and escaped by hiding for hours in a field.
In Gaza, footage obtained by Reuters showed dozens of people climbing over collapsed buildings in search of survivors, the air still dusty from impact. Sirens rang out as emergency teams put out cars that had caught fire.
Egypt, which has mediated between Israel and Hamas in the past, was in close contact with the two sides, according to Egyptian security sources. Turkish President Tayyip Erdogan also said his country was ready for a mediator role.
Qatari mediators have held urgent calls with Hamas officials to try to negotiate freedom for Israeli women and children seized by the militant group and held in Gaza, in exchange for the release of 36 Palestinian women and children from Israel's prisons, a source told Reuters.
An Israeli official said no negotiations were under way.
The violence jeopardises US-backed moves towards normalising relations between Israel and Saudi Arabia - a security realignment that could have threatened Palestinian hopes of self-determination and hemmed in Hamas backer Iran.
Israel's military faces harsh questions about the country's worst intelligence failure in 50 years. Netanyahu's options may also be curtailed by concern over the fate of Israeli hostages.
