The Israeli military has resumed operations in Gaza, saying Hamas broke a planned 72-hour ceasefire just hours after it had begun.
Palestinian sources said at least 27 people had been killed in an Israeli attack in Gaza. Israel said Hamas began the hostilities.
This morning, Hamas fired at our forces in S. Gaza in violation of a ceasefire. We suspect that an IDF soldier was kidnapped moments later.
— IDF (@IDFSpokesperson) August 1, 2014
Smoke and flames are seen following what witnesses said were Israeli air strikes in Rafah in the southern Gaza Strip August 1, 2014. Photo: Reuters Smoke and flames are seen following what witnesses said were Israeli air strikes in Rafah in the southern Gaza Strip August 1, 2014. Photo: Reuters
The Israeli army said it was checking reports a soldier had been captured.
Some 1,460 Palestinians, mostly civilians, have died in the conflict and 63 Israelis, mostly soldiers.
The ceasefire had been brokered by the US and UN to give civilians a reprieve from the violence, and had been seen as an unforeseen breakthrough after days of diplomatic deadlock.
Palestinian and Israeli delegations have arrived in Cairo, Egypt, with the hope of negotiating a longer-term cessation of hostilities, but the fate of the talks now see unclear.
The BBC's Bethany Bell, in Jerusalem, says there had been enormous international pressure for a 72-hour lull to allow people in Gaza to bury their dead and restock with food.
During the morning life appeared to be returning to some kind of normality in Gaza, with many Palestinians heading towards heavily shelled areas to see if their homes were still intact.
But the Gaza health ministry reported that at least 27 Palestinians were killed and 100 injured in an Israeli attack near the southern town of Rafah after the ceasefire began.
AFP news agency said the artillery barrage was continuing, preventing medics from recovering dead and wounded from the site.
Israeli foreign affairs spokesman Yigal Palmor told the BBC that Israeli forces had retaliated after being attacked in what seemed like a planned move by Hamas.
"There was a full-scale attack on an Israeli unit and this unit had to respond," he said.
"After it responded, Hamas started firing rockets on Israeli territory again and therefore the fighting resumed all along the line.
"I can't say for sure but this see like it was planned, like it was well prepared, and they had no intention to keep and observe the ceasefire to begin with."
Meanwhile Israeli and Palestinian delegations have arrived in Cairo for negotiations with the government of Egypt, at the invitation of Egypt, the statement said, with the aim of reaching "a durable ceasefire".
But our correspondent says the breakdown of the ceasefire casts an enormous shadow over the talks.