Israel declared a Gaza ceasefire over on Friday, saying Hamas militants breached the truce soon after it came in effect and apparently captured an Israeli officer while killing two other soldiers.
Renewed Israeli shelling killed more than 50 Palestinians and wounded some 220, hospital officials said. Prime Minister Benjamin Netanyahu called his security cabinet into special session and publicly warned Hamas and other militant groups they would "bear the consequences of their actions".
The 72-hour break announced by U.S. Secretary of State John Kerry and U.N. Secretary-General Ban Ki-moon was the most ambitious attempt so far to end more than three weeks of fighting, and followed mounting international alarm over a rising Palestinian civilian death toll.
The ceasefire, which began at 8 a.m. (0500 GMT), had prompted Palestinian families to trek back to battle-devastated neighbourhoods where rows of homes have been reduced to rubble. It was to be followed by Israeli-Palestinian negotiations in Cairo on a longer-term solution.
Egyptian officials said the invitation to negotiators still stood, but some Palestinian representatives had asked for a postponement until Saturday or Sunday to allow a new truce to be reached.
The Israeli military said that 90 minutes into the truce, militants attacked soldiers searching for tunnels in the southern Gaza Strip used to infiltrate fighters into Israel.
"Out of a tunnel access point or several, terrorists came out of the ground. At least one was a suicide terrorist who detonated himself. There was an exchange of fire," said Lieutenant-Colonel Peter Lerner, a military spokesman. Two of the soldiers were killed.
"The initial indication suggests that a soldier has been abducted by terrorists during the incident," he said in a conference call with reporters. Mark Regev, a Netanyahu spokesman, said Hamas was responsible for the attack.
Asked if the ceasefire was over, Lerner replied: "Yes. We are continuing our activities on the ground." He said Israeli forces were mounting an "extensive effort" to locate the soldier.
White House spokesman Josh Earnest called on Hamas to release the soldier, identified by Israel as Second-Lieutenant Hadar Goldin, 23. Britain's Foreign Office said it was urgently looking into reports that he also held British nationality.
"We would encourage those who have influence with Hamas to get them back on the terms of the ceasefire and get them to abide by the agreements that they struck just yesterday," Earnest said on CNN.
The Gaza Health Ministry said more than 50 people were killed and 220 wounded by Israeli shelling after the incident near the southern town of Rafah.
There was no immediate word from militant groups on whether any were holding the officer. Sami Abu Zuhri, a spokesman for the dominant Hamas movement in Gaza, said Israel was trying to mislead the world and "cover up its Rafah massacre".
A statement issued by Netanyahu's office said he spoke by telephone with Kerry and told him "the Palestinians had blatantly breached the humanitarian ceasefire" and attacked Israeli soldiers.
"Israel will take all necessary steps against those who call for its annihilation and terrorise its citizens," the statement quoted Netanyahu as saying.
WARREN OF TUNNELS
The truce had left Israeli ground forces in place in the Hamas-dominated Gaza Strip and a military spokeswoman had said operations would continue to destroy a warren of tunnels through which the Islamist group has menaced Israel's southern towns and army bases.
Israeli officials have long voiced concern that militants would try to capture a soldier or an Israeli civilian. In 2011, Israel released more than 1,000 Palestinian prisoners in exchange for Gilad Shalit, a soldier snatched by Hamas five years earlier.
Israel launched its offensive in Gaza on July 8, unleashing air and naval bombardments in response to a surge of cross-border rocket attacks. Tanks and infantry pushed into the territory of 1.8 million on July 17.
Gaza officials say at least 1,509 Palestinians, mostly civilians, have been killed and 7,000 wounded. Sixty-three Israeli soldiers have been killed and more than 400 hurt. Three civilians have been killed by Palestinian rockets in Israel.
Eight rockets and mortar bombs were fired from Gaza at Israel after the ceasefire began, the military said, adding that one was intercepted by the Iron Dome system and seven hit open areas.
Amid strong public support in Israel for the Gaza campaign, Netanyahu had faced intense pressure from abroad to stand his forces down.
International calls for an end to the bloodshed intensified after shelling on Wednesday that killed 15 people sheltering in a U.N.-run school in Gaza's Jabalya refugee camp.
Hamas, isolated in an Arab world concerned about the rise Islamist militancy, is seeking an end to Israel's blockade of Gaza. It also wants a hostile Egypt to ease restrictions at its Rafah crossing with the territory imposed after the military toppled Islamist president Mohamed Mursi last July.
Israel has balked at freeing up Gaza's borders under any de-escalation deal unless Hamas's disarmament is also guaranteed.
Saudi Arabia's King Abdullah, in a speech read out on his behalf on state television on Friday, accused Israel of committing "war crimes against humanity" in Gaza. [Id:nL6N0Q73ON]
A senior State Department official travelling with Kerry in India had said U.S. Deputy Secretary of State Bill Burns would arrive in Cairo on Saturday and that Frank Lowenstein, the acting U.S envoy for Middle East peace, and another U.S. official, Jonathan Schwartz, would be there on Friday.
The Palestinian delegation would be comprised of Hamas, Western-backed Fatah, the Islamic Jihad militant group and a number of smaller factions, Palestinian officials said. But U.S. officials said Israel and the United States would not sit across the table from Hamas, which the two countries, along with the European Union, consider a terrorist group.
Additional reporting by Ari Rabinovitch, David Brunnstrom in New Delhi; Lesley Wroughton in Washington; Michelle Nichols at the United Nations; and Omar Fahmy in Cairo; Writing by Jeffrey Heller in Jerusalem; Editing by Giles Elgood