Cross-border fighting between Israel and Hamas abated on Tuesday after a day of Palestinian rocket attacks and Israeli air strikes but Israel said it reserved the right to strike again and kept its troops and tanks massed at the Gaza frontier.
The biggest Israeli-Palestinian escalation in months, which began on Monday with the longest-range Palestinian rocket attack to cause casualties in Israel for five years, appeared to have been curbed overnight by Egyptian mediation.
But even if brought to an end, the crisis could have an impact on an Israeli election in two weeks in which right-wing Prime Minister Benjamin Netanyahu says he must stay in power to keep Israelis safe.
Israel responded to Monday's rocket attack with a wave of strikes on targets belonging to the Hamas militant group that controls the Palestinian enclave of Gaza.
Seven Israelis were injured in the initial rocket attack and five Palestinians were wounded by the retaliatory Israeli strikes.
Netanyahu, who cut short a visit to the United States to fly home and deal with the crisis, said Israel may take further action in Gaza.
"We are prepared to do a lot more. We will do what is necessary to defend our people and to defend our state," he said in a satellite address delivered from Tel Aviv to the pro-Israel U.S. lobby group AIPAC in Washington.
The border fell quiet on Tuesday morning after Hamas and the Islamic Jihad militant group, which also took part in the fighting, said Egypt had brokered a truce.
As in past escalations that ended with Egyptian mediation, Israel denied it had agreed to a ceasefire with Hamas, which it views as a terrorist group.
"Netanyahu is trying to portray himself as a hero to his people, therefore he publicly denies the understanding reached with the Egyptians," Islamic Jihad official Khader Habib said. "Resistance factions are committed to calm as long as the enemy abides by it."
Rocket warning sirens, which had sounded in Israeli towns near the border on Monday night, fell silent by morning.
The U.N. Middle East envoy Nickolay Mladenov told the Security Council on Tuesday he had been working with the Egyptians to secure a ceasefire.
"A fragile calm seems to have taken hold," he said.
Mladenov condemned indiscriminate firing of rockets by Hamas toward Israel as provocative acts that increased the risk of escalation and he urged maximum restraint by all parties.
The escalation was the biggest since November between Israel and Hamas. Israel launched three assaults against Palestinians living in the besieged Gaza Strip between 2007 and 2014.
In the 2014 Gaza war, more than 2,100 Palestinians were killed in seven weeks of fighting. Seven Israelis were killed.
Security is a major issue as Netanyahu, in power for a decade, faces his strongest electoral challenge from a centrist coalition led by an ex-general. Netanyahu is beset by corruption allegations which he denies. He says he has kept Israelis safe with a tough stance towards the Palestinians that could be weakened if he leaves office.
Meanwhile a peace process aimed at ending the Israel-Palestinian conflict based on a two-state solution has all but collapsed.
In Washington, Netanyahu met U.S. President Donald Trump, who reversed decades of U.S. policy to sign a proclamation recognising Israeli sovereignty over the Golan Heights, which Israel captured from Syria in the 1967 Middle East war.
A senior Israeli official said Trump's move was proof that Israel could retain land captured in what he called a "defensive war", an apparent suggestion of a permanent hold over other areas captured in 1967, such as parts of the West Bank and East Jerusalem.
"WE DON'T WANT WAR"
The Israeli military blamed Hamas, the dominant armed group in Gaza, for Monday's initial strike that destroyed a house in Mishmeret, a village north of Tel Aviv. It said the rocket had been launched from the enclave, some 120 km (70 miles) away.
Retaliatory Israeli air strikes in Gaza lit up the night sky and explosions rocked the densely-populated coastal enclave, destroying targets that included the office of Hamas leader Ismail Haniyeh. The militia said extra Israeli soldiers and tanks had been moved to the border.
In the morning, with the bombing having stopped, Gazans picked through the rubble of destroyed buildings to search for valuables and documents. Some Gaza universities were shut but schools were open, although many families kept children home.
"We don’t want war, but if Israel wants it then what should we do? We ask our factions to respond," said Mohammad Sayed, 40. "But we hope Egypt reaches a deal to end this."
Gaza militants fired barrages of rockets into Israel late into Monday night. Some were shot down by Israeli defences and others landed in empty areas. Israel remained on high alert on Tuesday and ordered schools near the border closed and residents to stay near bomb shelters.
"I told my kids that everything is going to be all right and that it will be over. We trust the government will solve the problem," Eliav Vanunu, whose house in the Israeli border town of Sderot was damaged by a rocket on Monday night, said on Israel Radio.
Gaza is home to 2 million Palestinians, mostly descendants of people who fled or were driven from homes in Israel on its founding in 1948.
Israel captured the territory in the 1967 war but pulled out its troops and settlers in 2005. Hamas took control two years later, and since then Israel has maintained a security blockade that has brought Gaza's economy to a state of collapse.
In the past year, nearly 200 Palestinians and one Israeli soldier have been killed during demonstrations near the border by Palestinians seeking a lifting of the blockade and the right to return to homes in Israel. Israel says it has no choice but to use deadly force to protect the frontier from militants.
*This story was edited by Ahram Online.