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 Hamas, the Islamist group which runs Gaza, said its armed wing had
sent several drones to carry out "special missions" deep inside
Israel - a development which, if confirmed, would mark a step up in
the sophistication of its arsenal.
More than 166 Palestinians, most of them civilians, have been
killed, Gaza health officials said, in seven days of fighting that
has shown no sign of ending.
Israeli aircraft and naval gunboats attacked 204 targets in the Gaza
Strip overnight, said the army, in the worst flare-up in
Israeli-Palestinian violence in almost two years. Health officials
said at least 20 people were wounded.
Palestinian militants fired more than 20 rockets into Israel,
causing no casualties, the military added.
 The Israeli military said the drone was intercepted near the port of
Ashdod by a U.S.-built Patriot missile, used largely ineffectively
by Israel against Iraqi Scud missiles in the 1991 Gulf War.
The force was trying to locate debris in the area about 25 km (15
miles) north of Gaza, and determine whether it had carried
explosives.
There was no sign of any sharp escalation of Israeli attacks in the
northern Gaza Strip, where Israel threatened on Sunday to step up
strikes against rocket-launching sites in parts of the town Beit
Lahiya and urged thousands of its residents to leave.
A U.N. aid agency said around a quarter of Beit Lahiya's 70,000
residents have fled deeper into the Gaza Strip. Al-Mezan, a
Gaza-based Palestinian human rights group, said 869 Palestinian
homes have been destroyed or damaged in Israeli attacks over the
past week.
 DIPLOMATIC EFFORTS
U.S. Secretary of State John Kerry, whose bid to broker a wider
Israeli-Palestinian peace deal collapsed in April, offered on Sunday
to help secure a Gaza truce.
The call was echoed by France and by Germany, which will send its
foreign minister to the region on Monday. But with the United States
and European Union, like Israel, shunning Hamas as a "terrorist"
group, Middle Eastern intermediaries were mooted.
An Egyptian-mediated truce doused the last big Gaza flare-up, an
eight-day war in 2012. Cairo is now again seeking calm, but its
military-backed government is at odds with Islamist Hamas,
complicating any mediation efforts.
Qatar and Turkey have also been suggested as possible truce brokers.
Gaza health officials said 138 civilians, including at least 30
children, were among the dead.
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There have been no fatalities in Israel since border hostilities
intensified last Tuesday. Israel's Iron Dome anti-missile system has
intercepted many of the rocket salvoes. But the persistent rocket
fire has disrupted life in major cities, paralyzed vulnerable
southern towns and triggered Israeli mobilization of troops for a
possible Gaza invasion if the Palestinian rockets persisted.
While allowing that a diplomatic solution could eventually be found,
an Israeli official said Israel would, for now, pursue its military
offensive "to restore quiet over a protracted period by inflicting
significant damage to Hamas and the other terrorist groups in the
Gaza Strip".
Hamas and Islamic Jihad, the second-most potent Gaza faction, made
clear they would not accept a mere "calm for calm" where both
Palestinian fighters and Israeli forces stand down.
"Netanyahu began this crazy war and he must end his war first,"
Hamas leader Izzat Al-Reshiq told Al-Arabiya television.
 "There can be no ceasefire unless the conditions of the Resistance
are met," he added, saying Israel had to stop blockading Gaza and
free hundreds of Palestinians it rounded up in the occupied West
Bank last month while searching for three Jewish seminary students
who it said were kidnapped by Hamas.
Hamas neither confirmed nor denied responsibility. Rocket fire from
Gaza increased during the West Bank dragnet. Tensions were further
inflamed when the three teens' bodies were discovered, after which
suspected Israeli avengers killed a Palestinian youth from East
Jerusalem.
(Writing by Jeffrey Heller and Dan Williams)
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