By Nidal al-Mughrabi and Dan Williams
GAZA/JERUSALEM, July 24 (Reuters) - Israel won a partial reprieve from the economic pain of its Gaza war on Thursday with the lifting of a U.S. ban on commercial flights to Tel Aviv, as fighting pushed the Palestinian death toll over 700.
A truce between the Jewish state and Hamas-led Islamist guerrillas remained elusive despite intensive mediation bids.
Palestinians said residents of two southern villages were trapped by days of tank shelling, with medics unable to evacuate wounded. U.N. agencies said more than 140,000 people had been displaced. Hamas fired rockets at Tel Aviv and said its gunmen carried out a lethal ambush on Israeli soldiers in north Gaza.
With Washington's encouragement, and the involvement of Turkey and Hamas ally Qatar, Egypt has been trying to broker a limited humanitarian ceasefire for the battered enclave.
One Cairo official said on Wednesday it could take effect by the weekend, in time for the Eid al-Fitr festival next Monday or Tuesday, Islam's biggest annual celebration at the end of the fasting month of Ramadan.
But a U.S. official described any truce by the weekend as unlikely, as did an Israeli security cabinet minister who said the army would need one to two weeks to complete its main mission of razing tunnels used by Hamas for cross-border raids.
"If the talk is of a humanitarian hiatus for - this is not pleasant to say - removing bodies, all kinds of things that are connected to the civilian population in the short-term, this might be weighed," the minister, Gilad Erdan, told Israel Radio.
"But I will oppose any ceasefire until it is clear both that the tunnels will be destroyed and what will happen in the post-ceasefire period - how we will guarantee that quiet for the residents of Israel will really be preserved in the long-term."
The death toll in Gaza reached 729 on Thursday as Israeli tank fire and pre-dawn assaults killed 35 people in the Hamas-dominated coastal enclave, including an 18-month-old baby and six members of the same family, Palestinian officials said.
In southern Khuzaa and Abassan villages, they said, Israeli shelling left dead and wounded under rubble, while medical crews could not risk approaching. Elsewhere in Gaza, a U.N. aid agency said three of its teachers were killed in Israeli air strikes.
Israel has lost at least 32 soldiers in clashes inside Gaza and with Hamas raiders who have slipped across the fortified frontier in tunnels. The military confirmed there had been a new clash on Thursday but did not immediately publish casualties.
Palestinian rockets and mortar bombs have killed three civilians in Israel. Such shelling surged last month as Israel cracked down on Hamas in the occupied West Bank, triggering the July 8 air and sea barrage on the Gaza Strip that escalated into an invasion a week ago.
Though Israel's Iron Dome rocket interceptor has shot down most of the rockets fired from Gaza, one that came close to Tel Aviv's Ben Gurion Airport on Tuesday prompted the U.S. Federal Aviation Administration (FAA) to bar American flights there.
An ensuing wave of cancellations by foreign airlines emptied Israel's usually bustling international gateway and hurt its hi-tech economy at the height of summer tourist season. It was hailed as a victory by Hamas and prompted Israeli Prime Minister Benjamin Netanyahu to appeal to the Obama administration to intervene.
The FAA canceled the ban late on Wednesday after reviewing the security situation. The European Air Safety Agency (EASA) said on Thursday it was about to follow suit and lift its own recommendation to avoid flying to Tel Aviv.
US Airways, a unit of American Airlines Group Inc, said it was resuming its non-stop Tel Aviv to Philadelphia service. Germany's Lufthansa said its suspension of flights to Tel Aviv would continue to Friday.
"The Europeans did not really deliberate over this, but acted more as a follow-up to the American decision," said Gadi Regev, chief of staff for Israel's Civil Aviation Authority.
Some European flights have been diverted to Cyprus's Larnaca airport, where passengers took Israeli carriers to Ben Gurion.
In what appeared to be an attempt to trigger a fresh FAA ban, Hamas said it launched at least two rockets at Ben Gurion on Thursday. But no sirens were heard at the airport as the rockets flew wide and were shot down by Iron Dome over Tel Aviv, to the west, and Petah Tikva, to the north.
Hamas leader Khaled Meshaal said his fighters had made gains against Israel and voiced support for a humanitarian truce, but only if Israel eased restrictions on Gaza's 1.8 million people. Hamas wants next-door Egypt to open up its border with Gaza too.
"Let's agree first on the demands and on implementing them, and then we can agree on the zero hour for a ceasefire," Meshaal said on Wednesday in Qatar. "We will not accept any proposal that does not lift the blockade ... We do not desire war and we do not want it to continue, but we will not be broken by it."
U.N. High Commissioner for Human Rights Navi Pillay said there was "a strong possibility" that Israel was committing war crimes in Gaza, where medical officials say most of those killed were civilians.
Pillay also condemned indiscriminate Islamist rocket fire out of Gaza, and the U.N. Human Rights Council said it would launch an international inquiry into alleged violations.
A furious Netanyahu denounced the inquiry as a "travesty".
"The HRC should be launching an investigation into Hamas's decision to turn hospitals into military command centers, use schools as weapons depots and place missile batteries next to playgrounds, private homes and mosques," he said.
U.N. Secretary-General Ban Ki-moon, who has also been on a truce-seeking mission, lashed out at Gaza militants, expressing "outrage and regret" that rockets had been found inside a U.N. school for refugees for the second time during the conflict.
Ban said storing rockets there "turned schools into potentially military targets, endangering the lives of innocent children", along with U.N. employees and the tens of thousands of sheltering Palestinians. He urged an investigation.
U.S. Secretary of State John Kerry returned to Egypt on Wednesday after seeing Palestinian President Mahmoud Abbas in the occupied West Bank and Ban and Netanyahu in Jerusalem.
"We have certainly made some steps forward. There is still work to be done," said Kerry, on one of his busiest regional visits since Netanyahu called off U.S.-sponsored peace talks over Abbas's power-share deal with Hamas in April.
Gaza has been rocked by regular bouts of violence since Israel unilaterally pulled out of the territory in 2005.
Hamas, which rejects Israel's right to exist and is shunned in the West, balked at Egypt's proposal for an unconditional truce, saying its terms had to be met in full for any end to the conflict. Israel briefly held fire last week at Cairo's behest.
The war is exacting a heavy toll on impoverished Gaza. Officials say at least 475 houses have been destroyed by Israeli fire and 2,644 damaged. Some 46 schools, 56 mosques and seven hospitals have also suffered varying degrees of damage.
Israel says one of its soldiers is missing in Gaza, and the military believes he might be dead. Hamas says it has captured him but has not released a picture of him in their hands. (Additional reporting by Noah Browning in Gaza, Arshad Mohammed and Yasmine Saleh in Cairo, Amena Bakr in Doha, Stephanie Nebehay in Geneva, and Thomas Seythal in Berlin; Writing by Dan Williams; Editing by Nick Macfie and Paul Taylor)
08/08/2014 2:47 PM EDT
White House Concerned By Renewed Fighting
The White House on Friday urged Israel and the Palestinians to resume talks and do what they can to protect civilians after Egyptian-mediated negotiations failed to extend a ceasefire and rocket fire resumed.
"The United States is very concerned about today's developments in Gaza," White House spokesman Josh Earnest told reporters.
"We condemn the renewed rocket fire and we are concerned about the safety and security of civilians on both sides of that conflict," he said.
08/08/2014 1:42 PM EDT
Official: 5 Palestinians Killed In Gaza
Five Palestinians, including a 10-year-old boy, have been killed in Israeli airstrikes on Gaza since a ceasefire fell apart on Friday, a Palestinian medical official reported to Agence France Presse.
Meanwhile, the Israeli army said Palestinian militants fired 35 rockets into Israel on Friday, injuring a soldier and a civilian.
The father of a ten-year old Palestinian boy, who was killed in an Israeli air strike on the Sheikh Radwan neighbourhood in northern Gaza City, mourns at the city's Al-Shifa hospital, on August 8, 2014. (MOHAMMED ABED/AFP/Getty Images)
08/08/2014 9:23 AM EDT
Palestinian Delegation Says Gaza Talks Will Continue
Palestinian factions will remain in Cairo and press on with Egyptian-mediated talks despite the end of the ceasefire in Gaza, the head of the delegation, Fatah official Azzam Ahmed, said on Friday.
"We are not for escalation. We are ready to continue through our Egyptian brothers in negotiating to reach a final agreement that would return the rights to their owners," Ahmed said. "I mean here lifting the blockade of Gaza."
Ahmed said Palestinian negotiators were due to meet Egyptian intelligence officials, who have been mediating the talks, later in the day. He said Palestinian factions were united in their decision not to extend the 72-hour truce that ended at 0500 GMT and had been clear about their basic demands to end the conflict.
08/08/2014 9:13 AM EDT
Egypt: Agreement Close In Gaza Talks
Egypt called on Friday for an immediate resumption of the ceasefire in Gaza and a return to the negotiating table, saying that only a few outstanding issues remained in negotiations it was mediating between Israel and the Palestinians.
"The foreign ministry calls on all sides to rise to their responsibilities ... and to return immediately to the ceasefire commitment and exploit the opportunity available to resume negotiations on the very limited sticking points that remain in the fastest possible time," the foreign ministry said in a statement.
08/08/2014 3:58 AM EDT
Israeli Airstrikes On Gaza Resume
BREAKING: Israel says it's resumed strikes on Gaza in response to rocket fire, after end of 3-day truce.— The Associated Press (@AP) August 8, 2014
08/08/2014 3:02 AM EDT
Cease-Fire Ends With New Rocket Attacks
A 72-hour cease-fire expired at 8 a.m. today, and not long after, Gaza militants began firing rockets at Israel, The Associated Press reported.
The Israeli military said at least 10 rockets had been fired at Israel since the truce ended. Prior to the attacks, a senior official for Hamas said the militant groups would not extend the cease-fire.
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08/06/2014 2:46 PM EDT
Official: Israel Agrees To Extend Ceasefire
Israel has conditionally agreed to extend a ceasefire that ended a month of fighting in Gaza beyond a Friday deadline, an Israeli official said on Wednesday, speaking on condition of anonymity.
The official did not say for how much longer Israel had agreed to extend the truce, only that: "Israel has expressed its readiness to extend the truce under its current terms," referring to the deal brokered by Egypt that took effect on Tuesday.
Hamas had no immediate comment.
08/06/2014 2:12 PM EDT
IDF: Rocket Sirens Were False Alarm
IDF confirms rocket sirens in southern Israel were false alarm http://t.co/QN677jtlXE— Haaretz.com (@haaretzcom) August 6, 2014
08/06/2014 1:18 PM EDT
Report: Rocket Sirens Sound At Gaza Border
ABC Foreign Editor Jon Williams reports that the IDF have confirmed the rocket sirens are sounding, but are checking to see if it is a false alarm.
08/05/2014 4:20 PM EDT
Israel Arrests Kidnapping Suspect
Reuters reports that Israel has arrested one of the suspects in the kidnapping and killing of three Israeli teenagers in the West Bank in June.
Hussam Kawasme, a 40-year-old resident of the West Bank city of Hebron, was arrested on July 11 in connection with the killing of Israelis Gil-Ad Shaer, Naftali Fraenkel and Eyal Yifrah, who went missing on June 12 and were discovered dead a couple of weeks later.
Their kidnapping sparked a cycle of violence that led to the month-long conflict between Israel and Palestinian militants in the Gaza Strip.
Kawasme's arrest was made public for the first time on Tuesday in a document from an Israeli court case over whether houses belonging to him and two other suspects - who remain at large - should be destroyed as a punitive measure.
The lawyers listed as representing Kawasme were not reachable for comment.
The court document said Kawasme had admitted to helping to organize the kidnapping - securing funding from the Hamas Islamist group in Gaza and purchasing weapons which he passed on to the two other suspects who carried out the attack.
Kawasme also helped to bury the bodies of the teenagers in a plot of land he had bought a few months earlier, it said.
Israel has named the other two suspects in the case as Marwan Kawasme and Amar Abu Aysha.