A humanitarian truce in Gaza yesterday collapsed only hours after it began amid a deadly new wave of violence and the apparent capture by Hamas of an Israeli soldier.
US President Barack Obama called for the soldier to be "unconditionally" released, but also said more must be done to protect Gaza civilians.
Intensive shelling killed dozens of people in southern Gaza hours into the truce, which began at 8:00am and had been due to last 72 hours.
Hamas accused Israel of breaking the short-lived ceasefire, while the Jewish state said it was responding to militant rocket fire.
The chances of a durable truce seemed as remote as ever after the probable capture of Israeli Second Lieutenant Hadar Goldin, 23.
The military also announced that two soldiers had been killed in the same incident near the southern city of Rafah.
"Our initial indications suggest a soldier has been abducted by terrorists in an incident where terrorists breached the ceasefire," according to army spokesman Lieutenant Colonel Peter Lerner.
In 2006, militants from Gaza captured Israeli conscript Gilad Shalit and held him for five years before freeing him in exchange for more than 1,000 Palestinian prisoners.
The short truce gave brief respite to people in the battered Strip from fighting that has now killed 1,600 on the Palestinian side, mostly civilians, and 63 Israeli soldiers and three civilians on the other.
Within hours, air raid sirens were heard on the Israeli side, and heavy shelling resumed in Rafah.
Across Gaza, 160 people were killed or died of their wounds yesterday, including 65 in Rafah and 50 in Khan Yunis, emergency services spokesman Ashraf al-Qudra said.
An Israeli army spokeswoman said 51 rockets and mortar rounds hit Israel yesterday, with another nine rockets shot down by the Iron Dome missile defence system.
Israeli soldiers shot dead two Palestinians during separate clashes in the northern and central West Bank, while in and around Hebron more than 100 people were wounded in clashes with Israeli forces, seven of them seriously.
Obama said the United States "unequivocally condemned Hamas and the Palestinian factions that were responsible for killing two Israeli soldiers, and abducting a third almost minutes after a ceasefire had been announced".
"If they are serious about trying to trying to resolve this situation, that soldier needs to be unconditionally released, as soon as possible."
Obama added: "We have also been clear that innocent civilians in Gaza caught in the crossfire have to weigh on our conscience and we have to do more to protect them."
Earlier yesterday, the Israeli military warned people in Gaza to remain at home, saying in voice messages to mobile phones that it was "pursuing terrorist elements in Rafah".
US Secretary of State John Kerry had said that once the ceasefire was under way, Israeli and Palestinian representatives, including from Hamas, would begin talks in Cairo on a more durable truce.
The Palestinian militant group Islamic Jihad later said Egypt was postponing the talks after news of the Israeli soldier's capture, but Cairo said the invitation to talk was "still in place".
And Palestinian president Mahmud Abbas said a joint delegation, including Hamas and Islamic Jihad, will travel to Cairo Saturday for talks despite the renewed fighting.
In a speech published after the ceasefire broke down, Saudi King Abdullah denounced "inexcusable" world silence over Israel's "war crimes" in Gaza.
"We see the blood of our brothers in Palestine being shed in collective massacres, that have spared nobody, and in war crimes against humanity... all taking place under the eyes and ears of the international community... that has stood indifferently watching events in the whole region," he said.
"This silence is inexcusable" and will "result in a generation that rejects peace and believes only in violence," he said.
The truce came after the UN Security Council expressed "grave disappointment" that repeated ceasefire calls had gone unheeded, and demanded a series of humanitarian breaks to ease conditions for Gaza's civilians.
Prime Minister Benjamin Netanyahu's office accused Hamas and other Gaza militants of "flagrantly violating" the ceasefire.
Hamas spokesman Fawzi Barhum riposted that "it is the (Israeli) occupation which violated the ceasefire. The Palestinian resistance acted based on... the right to self defence."