Rockets were fired from the Gaza Strip by Palestinian militants late on Friday hours after Israel unleashed a wave of airstrikes, killing at least 10 people, including a senior militant, and wounding dozens.
Israel said it was targeting the Islamic Jihad militant group in response to an "imminent threat" following the arrest of another senior militant in the occupied West Bank earlier this week.
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Palestinian militants launched a barrage of rockets hours later as air raid sirens wailed in central and southern Israel, pushing the two sides closer to all-out war. Islamic Jihad claimed to have fired 100 rockets.
Video on social media showed the skies above southern and central Israel lighting up with rockets and interceptors from Israel's Iron Dome missile defense system.
Israel and Gaza's militant Hamas rulers have fought four wars and several smaller battles over the last 15 years at a staggering cost to the territory's 2 million Palestinian residents.