At least 40 people were killed and nearly 400 wounded in Israeli shelling of Gaza's northeastern Shejaiya district overnight, medics said on Sunday.
Emergency services spokesman Ashraf al-Qudra said 40 bodies had been retrieved from the neighbourhood, and at least 380 people had been wounded in shelling that was still continuing.
Thousands were fleeing northern Gaza Sunday after a night of fierce bombardment as the Israeli occupation forces expanded a ground assault on day 13 of the deadliest violence in the enclave in five years.
As UN chief Ban Ki-moon was to arrive in the region to add his weight to truce efforts, the Palestinian death toll hit 383 although medics said it was set to soar after a night of intense attacks to the north and east of Gaza City.
But the Islamist Hamas movement, the main power in Gaza, refused to yield in the face of the relentless air, sea and land attacks, continuing to response to Israel's offensive killing another two Israeli soldiers overnight, the army said.
As the warring sides showed no sign of giving up, diplomatic efforts to seek a truce were to intensify Sunday with Hamas's exiled leader Khaled Meshaal to meet Palestinian president Mahmud Abbas in Qatar to discuss an Egyptian truce proposal.
On the ground, the streets of the northern district of Shejaiya were filled with thousands of people fleeing for their lives after heavy shelling left casualties lying in the streets, an AFP correspondent reported.
Ambulances were unable to reach much of the area along the border because of heavy fire, and emergency services told AFP there were reports of dead and wounded trapped by the bombardment.
At Shifa hospital, casualties were being brought in by the minute, some in ambulances, but others in cars and trucks.
Among them were screaming children with shrapnel wounds. One of them was clearly already dead, his head hanging lifelessly.
Fights broke out in the emergency room as hysterical parents banged on the walls in fear and sorrow.
As day broke, there were reports of multiple casualties in strikes on Shejaiya and the neighbouring Zeitun district, as well as in Jabaliya to the north, emergency services spokesman Ashraf al-Qudra said.
Seven Israelis have been killed so far, five of them soldiers. Four soldiers were killed on Saturday, among them two who died in militant raid inside Israeli territory.
Another was killed by an anti-tank missile while the fourth died in a firefight with a militant who had emerged from a tunnel and attacked troops, the army said.
Israel said its ground operation to allegedly destroy the network of tunnels used by militants to stage deadly cross-border attacks was to "expand" later Sunday.
"This evening, the ground phase of Operation Protective Edge expands, as additional forces join the effort to combat terror in the Gaza Strip and establish a reality in which Israeli residents can live in safety and security," the army said.
Army spokesman Lieutenant Colonel Peter Lerner claimed that since the ground operation began late on Thursday, 70 militants had been killed, and 190 rockets had hit Israel.
Before dawn, an intensive artillery barrage struck areas east of Gaza City, killing at least two children, medics said, as the civilian death toll grew.
The increasing number of Palestinian children killed in the conflict is causing a growing outcry, with a joint statement from NGOs War Child and Defence for Children International saying more children had been killed than militants.
Figures provided by the UN children's agency on Sunday showed that at least 73 of the victims were under the age of 18.
Israeli Prime Minister Benjamin Netanyahu said Hamas was entirely responsible for any civilian casualties, accusing the group of "using innocent civilians as human shields."
Earlier this week, the UN agency for Palestinian refugees expressed outrage after finding 20 rockets stored in one of its empty schools in Gaza.
UNRWA has opened 49 of its schools to shelter those fleeing the most heavily bombarded areas. So far, more than 60,000 Gazans have sought sanctuary at UN institutions, the agency said.
Meanwhile, Hamas confirmed Meshaal had received an invitation for talks in Cairo over an Egyptian peace initiative.
Although the Islamist movement had made its position clear, it was "ready to cooperate with a move by any party that will achieve the specific Palestinian demands," a statement said.
The Egyptian foreign ministry was not able to confirm or deny the new invitation.
Earlier this week, an Egyptian truce proposal was briefly accepted by Israel, but snubbed by Hamas which said it had not been consulted.
Hamas's relations with Cairo have soured significantly since the ouster of its Islamist ally Mohamed Morsi of the Muslim Brotherhood.
But it is close to both Turkey and Qatar, where Meshaal is based.
Abbas and Meshaal will meet in Qatar Sunday to discuss the Egyptian-proposed truce, an official close to Abbas said.
Hamas is demanding a complete end to the debilitating 7-year-old Israeli blockade on Gaza, that the Rafah crossing with Egypt be opened, and that Israel free scores of veteran prisoners who were re-arrested in recent weeks.
*This story was edited by Ahram Online