EXCHANGES of fire have killed eight Palestinian children in a Gaza refugee camp and four people in Israel, shattering hopes for an end to three weeks of devastating violence.

The missile that slammed into a public playground in the seafront Shati UN refugee camp on Monday also killed at least two other people and wounded another 46, many of them also children, emergency services said.

Soon after, a security source said five Gaza militants were killed in a shootout with troops in southern Israel.

media_camera Tiny victims ... A relative points at Marwan Hassanein, 4, at the Shifa hospital in Gaza City. Marwan was injured by shrapnel while fleeing with his family on July 20 during Israeli shelling in the Shijaiyah neighbourhood. Picture: AP

Hamas’s armed wing claimed it killed 10 Israeli soldiers in a raid in the same area, and denied it lost any men.

The latest bloodshed pushed the Palestinian death toll from violence in and around the coastal enclave to more than 1050.

Palestinian medical sources blamed the refugee camp killings on the Israeli military, with witnesses saying the missiles had been fired from a fighter jet.

“An F-16 fired five rockets at a street in Shati camp where children were playing, killing some of them and injuring many more,” one said.

media_camera Grief ... A relative reacts after seeing the bodies of three Palestinian children, killed in an explosion in a public playground on the beachfront of Shati refugee camp. Picture: AFP

Inside Shifa hospital, an AFP correspondent saw the bodies of at least seven children from the blast at the camp, with more bodies being brought in on bloodied stretchers.

They were unloaded and taken directly to the mortuary.

The Israeli military categorically denied any attack, and said Hamas had aimed the rockets at Israel but that they misfired and hit the camp.

It also blamed an early attack inside the compound of Gaza’s biggest hospital on militant rocket fire that fell short of Israel and struck in the Palestinian territory.

media_camera Father’s pain ... Relatives help Hazem Eshbair, who lost two of his children in an explosion at a park at Shati refugee camp, in the northern Gaza strip. Picture: AP

In Israel, at least four people were killed when a mortar round fired from Gaza hit an administrative building in the Eshkol regional council, media reports said, in what was the biggest civilian loss of life inside the Jewish state since the start of the violence.

The latest deaths came after a brief lull in the fighting in Gaza for the beginning of the Muslim festival of Eid al-Fitr, torpedoing hopes of a truce despite intense international pressure.

media_camera Palestinian Sama al-Ajouz, 2, lays on a hospital bed in Gaza City, after being wounded by shrapnel on during an Israeli strike. Sama was evacuated to Jordon for brain surgery shortly after this photo was taken. Picture: AP

Following increasingly urgent calls by the UN and the US for an “immediate ceasefire,” a senior source in the West Bank said Palestinian president Mahmud Abbas was heading to Cairo with Hamas representatives for fresh talks on ending the violence.

Earlier US President Barack Obama phoned Israeli Prime Minister Benjamin Netanyahu to demand an “immediate, unconditional humanitarian ceasefire”, in a call echoed hours later by the UN Security Council.

Mr Obama’s insistence has strained US-Israeli ties and put Netanyahu in a tight spot with hardliners in his government, commentators say.

media_camera Cycle of violence ... Smoke fills the skyline following Israeli shelling in Gaza City. Picture: AFP

Originally published as Children die as truce hopes shatter