Gaza City --- Witnesses say Israeli ground troops are advancing into crowded residential areas of Gaza City and thousands of terrified residents are fleeing their homes.
Israeli troops backed by helicopter gunships, tanks and heavy guns thrust deeper into the city than ever before Thursday to seek Hamas fighters, they said.
It wasn't clear whether this would be a brief foray or signal a new phase in Israel's devastating offensive against Gaza's Islamic Hamas rulers.
Israel has balked at launching all-out urban warfare in Gaza City, where Hamas militants are more familiar with the lay of the land and Israeli casualties would be liable to spiral the latest offensive comes as Egypt and Hamas were negotiating a proposal for a 10-day cease-fire in Gaza.
Egyptian and Palestinian officials said they hoped to seal Hamas' agreement on a temporary halt in fighting, which would be presented to Israel for approval. Key uncertainties remained for a longer-term deal under which Gaza's borders would be open and Israeli troops would withdraw. Israel, meanwhile, prepared to dispatch two envoys — one to Egypt to present the Jerusalem government's stance, and one to Washington to discuss a possible American role in security on the porous border between Egypt and the Gaza Strip.
The officials provided details of the Egypt-Hamas deal on condition of anonymity because of the sensitivity of the talks. But Egyptian officials also expressed public optimism that momentum toward a deal was growing.
"We're working with Hamas and we're working with the Israeli side. We hope to reach an outcome soon," Hossam Zaki, a spokesman for Egypt's Foreign Ministry, told the British Broadcasting Corp.
A Hamas spokesman said he also believed an agreement was possible.
"There is good progress in Egypt. We hope that now Egypt will contact Israel and talk about all issues," Ghazi Hamad, a senior Hamas adviser, told the BBC.
Asked if a negotiated settlement could also include a deal between Hamas and the rival Palestinian administration, led by Palestinian President Mahmoud Abbas in the West Bank, Hamad said he was hopeful.
"I am optimistic now because I think there is no other choice for us," he said.
In Jerusalem, a senior Defense Ministry official said Israel was sending a chief envoy to Egypt on Thursday to present Israel's stance. The senior official spoke on condition of anonymity because he was not authorized to speak to the media. Amos Gilad's trip has been postponed for days but his presence in Egypt would be a strong signal of progress.
At the same time, Aharon Abromovich, the director of Israel's Foreign Ministry, was traveling to Washington to discuss a potential American role in the cease-fire with diplomats and congressional officials. Yigal Palmor, a Foreign Ministry spokesman, said the U.S. could potentially provide technology.
Egypt's foreign minister, Ahmed Aboul Gheit, said details on the proposed cease-fire would be kept "under a lid of secrecy" until all parties agreed but said issues included an Israeli withdrawal from Gaza, opening crossings into the blockaded territory and some kind of international monitors.
Israel showed no signs of slowing its bruising 19-day-old offensive against Gaza's Hamas rulers, striking some 60 targets. One airstrike hit an overcrowded cemetery, spreading body parts and rotting flesh over a wide area. The army said the airstrike targeted a weapons cache hidden near the graveyard.
Guerrillas in Lebanon sent rockets crashing into northern Israel on Wednesday for the second time in a week, drawing an Israeli artillery barrage and threatening to drag the Jewish state into a second front.
The rocket fire in the north caused no injuries, but sent residents scurrying to bomb shelters. There was no immediate claim of responsibility, and speculation focused on small Palestinian groups. Hezbollah, the Iranian-backed guerrilla group that fought a monthlong war with Israel in 2006, denied involvement in last week's attack.
Israel launched the onslaught in Gaza on Dec. 27, seeking to stop the ruling Hamas militant group from firing rockets into southern Israel. The offensive has killed more than 1,000 Palestinians, half of them civilians, according to the Palestinian Health Ministry. The toll included 11 Palestinians killed Wednesday, medical officials said.
Thirteen Israelis have also been killed since the offensive began, four by rocket fire from Gaza.
The Muslim world has expressed outrage over Israel's Gaza offensive, and in a new condemnation Wednesday, al-Qaida leader Osama bin Laden urged Muslims to launch a holy war against Israel.
Desperately trying to end the fighting, U.N. secretary-general Ban Ki-moon opened a visit to the Mideast on Wednesday urging an immediate halt to the violence.
"My call is (for) an immediate end to violence in Gaza," he said in Cairo after meeting Egyptian President Hosni Mubarak.
"It is intolerable that civilians bear the brunt of this conflict," he said, adding that the "negotiations need to be intensified to provide arrangements and guarantees in order to sustain an endurable cease-fire and calm." Ban is scheduled to arrive in Israel on Thursday. He will also visit Jordan, the Palestinian-controlled West Bank, Turkey, Lebanon, Syria and Kuwait. His itinerary does not include a stop in Gaza because of the ongoing conflict.
Israeli military officials have said talks in Cairo will determine whether Israel moves closer to a truce with Hamas or widens its offensive to send thousands of reservists into crowded, urban areas where casualties on both sides would likely mount.
Hamas has insisted that it would not agree to a cease-fire unless Israel pulls its troops out of the tiny Mediterranean coastal strip and allowed Gaza's borders to the outside world to immediately reopen.
But the temporary cease-fire proposal being discussed in Cairo would allow Israel's military to stay in place and the borders closed during a 10-day period of quiet, the Egyptian and Palestinian officials close to the talks said.
During that time, Egyptian, Turkish and other international mediators would try to negotiate an arrangement for policing Egypt's border with Gaza to prevent weapons smuggling into the territory, the officials said.
This would likely entail some kind of international monitors on the Palestinian side of the border — but the two sides remained far apart on who would make up the force, where they would be deployed and their mission.
Overnight, Israeli warplanes and helicopter gunships pounded a police court in Gaza City, rocket-launching sites, gunmen, weapons-production and storage facilities and about 35 weapons smuggling tunnels, the military said. Later in the day, witnesses in southern Gaza reported air strikes on the house of a rocket squad leader and a militant's car.
Aircraft also struck the Sheikh Radwan cemetery in Gaza City, destroying about 30 graves — some just recently dug — and scattering bits of flesh and body parts, residents said.
Maj. Avital Leibovich, a military spokeswoman, said the army targeted a weapons cache next to the cemetery and a nearby rocket-launching site. She said the heavy damage was the result of secondary explosions.
Israel has repeatedly accused Hamas of using mosques, schools and other civilian areas to stage attacks or store weapons.
Fireballs and smoke plumes from Israeli bombing have become a common sight in the territory of 1.4 million people, who are trapped because Israel and Egypt have blockaded border crossings ever since the Islamic Hamas overran Gaza in June 2007.
Humanitarian concerns have increased amid the onslaught although some aid is reaching Gaza during daily three-hour lulls Israel has allowed to let in supplies.
Palestinian rocket fire has dropped off dramatically since the offensive began. Twelve rockets were fired at Israel on Wednesday, down from as many as 80 a day early in the operation.