An Israeli air strike in Gaza killed the wife and infant son of Hamas's military leader, Mohammed Deif, the group said, calling it an attempt to assassinate him after a ceasefire collapsed.
Palestinians launched more than 130 rockets, mainly at southern Israel, with some intercepted by the Iron Dome anti-missile system, the military said. No casualties were reported on the Israeli side.
Egypt, which has been trying to broker a long-term ceasefire in indirect Israeli-Palestinian talks, said it would continue contacts with both sides, whose delegates left Cairo after hostilities resumed on Tuesday.
But there appeared to be no end in sight to violence that shattered a 10-day period of calm, the longest break from fighting since Israel launched its Gaza offensive on July 8 with the declared aim of ending rocket fire into its territory.
Israeli aircraft have carried out 80 strikes in the Gaza Strip since Tuesday, "targeting terror sites", the military said.