Cross-border fighting between Israel and Hamas abated yesterday after a day of Palestinian rocket attacks and Israeli air strikes but Israel said it reserved the right to strike again and kept its troops and tanks massed at the Gaza frontier.
The biggest Israeli-Palestinian escalation in months, which began on Monday with the longest-range Palestinian rocket attack to cause casualties in Israel for five years, appeared to have been curbed overnight by Egyptian mediation.
But even if brought to an end, the crisis could have an impact on an Israeli election in two weeks in which right-wing Prime Minister Benjamin Netanyahu says he must stay in power to keep Israelis safe.
Israel responded to Monday's rocket attack with a wave of strikes on targets belonging to the Hamas militant group that controls the Palestinian enclave of Gaza.
Seven Israelis were injured in the initial rocket attack and five Palestinians were wounded by the retaliatory Israeli strikes.
Netanyahu, who cut short a visit to the United States to fly home and deal with the crisis, said Israel may take further action in Gaza.
"We are prepared to do a lot more. We will do what is necessary to defend our people and to defend our state," he said in a satellite address delivered from Tel Aviv to the pro-Israel US lobby group AIPAC in Washington.
The border fell quiet yesterday morning after Hamas and the Islamic Jihad militant group, which also took part in the fighting, said Egypt had brokered a truce.
As in past escalations that ended with Egyptian mediation, Israel denied it had agreed to a ceasefire with Hamas, which it views as a terrorist group.
"Netanyahu is trying to portray himself as a hero to his people, therefore he publicly denies the understanding reached with the Egyptians," Islamic Jihad official Khader Habib said. "Resistance factions are committed to calm as long as the enemy abides by it."
Rocket warning sirens, which had sounded in Israeli towns near the border on Monday night, fell silent by morning.
The UN Middle East envoy Nickolay Mladenov told the Security Council yesterday he had been working with the Egyptians to secure a ceasefire.
"A fragile calm seems to have taken hold," he said.
Mladenov condemned indiscriminate firing of rockets by Hamas toward Israel as provocative acts that increased the risk of escalation and he urged maximum restraint by all parties.
The escalation was the biggest since November between Israel and Hamas, which fought three wars between 2007 and 2014 and have come to the brink of all-out conflict several times since.
In the 2014 Gaza war, more than 2,100 Palestinians, most of them civilians, were killed in seven weeks of fighting. Sixty-six Israeli soldiers and seven civilians in Israel were killed.
Security is a major issue as Netanyahu, in power for a decade, faces his strongest electoral challenge from a centrist coalition led by an ex-general. Netanyahu is beset by corruption allegations which he denies. He says he has kept Israelis safe with a tough stance towards the Palestinians that could be weakened if he leaves office.
Meanwhile a peace process aimed at ending the Israel-Palestinian conflict based on a two-state solution has all but collapsed.
In Washington, Netanyahu met US President Donald Trump, who reversed decades of US policy to sign a proclamation recognising Israeli sovereignty over the Golan Heights, which Israel captured from Syria in the 1967 Middle East war.