By Nidal al-Mughrabi and Dan Williams
GAZA/JERUSALEM (Reuters) -Hamas launched rockets at Tel Aviv and toward Jerusalem early on Thursday and Israel vowed to keep pummelling the Islamist faction in Gaza despite a prediction by U.S. President Joe Biden that their fiercest hostilities in years might end soon.
There was no immediate word of casualties from the pre-dawn salvo, which set off sirens as far as northern Nahalal, 100 km (62 miles) from Gaza, sending thousands of Israelis to shelters.
At least 67 people have been killed in Gaza since violence escalated on Monday, according to the enclave's health ministry. Seven people have been killed in Israel, medical officials said.
With world powers demanding de-escalation of a conflict beginning to recall the Gaza war of 2014, Washington planned to send an envoy, Hady Amr, for talks with Israel and Palestinians.
"My expectation and hope is this will be closing down sooner than later, but Israel has a right to defend itself," Biden said on Wednesday after speaking to Netanyahu.
Biden did not explain the reasons behind his optimism. Netanyahu's office said he told the U.S. president that Israel would "continue acting to strike at the military capabilities of Hamas and the other terrorist groups active in the Gaza Strip".
On Wednesday, Israeli forces killed a senior Hamas commander and bombed several buildings, including high-rises and a bank, which Israel said was linked to the faction's activities.
Hamas signalled defiance, with its leader, Ismail Haniyeh, saying: "The confrontation with the enemy is open-ended."
Israel launched its offensive after Hamas fired rockets at Jerusalem and Tel Aviv in retaliation for Israeli police clashes with Palestinians near al-Aqsa mosque in East Jerusalem during the fasting month of Ramadan.
These escalated ahead of a court hearing - now postponed - that could lead to the eviction of Palestinian families from East Jerusalem homes claimed by Jewish settlers.
For Israel, the targeting of the two major cities posed a new challenge in the confrontation with Hamas, regarded as a terrorist group by Israel and the United States.
A Palestinian source said truce efforts by Egypt, Qatar and the United Nations had made no progress to end the violence.
U.S. Secretary of State Antony Blinken phoned Palestinian President Mahmoud Abbas and said Washington "was exerting efforts with all relevant parties to reach calm," the official Palestinian news agency WAFA said. Abbas is a Hamas rival whose authority is limited to the Israeli-occupied West Bank.
STRIFE WITHIN ISRAEL
The fighting has touched off strife within Israel, where some in the Arab minority mounted violent pro-Palestinian protests. Media reported spreading street attacks by Jews on Arab passersby in ethnically mixed areas on Wednesday.
In Gaza, two multi-storey residential buildings and a tower housing media outlets, including one linked to Hamas, collapsed after Israel urged occupants to evacuate in advance of its air strikes, and another structure was heavily damaged.
"Israel has gone crazy," said a man on a Gaza street, where people ran out of their homes as explosions rocked buildings.
Many in Israel also holed up in shelters as waves of rockets hit its heartland, some blown out of the sky by Iron Dome interceptors.
"All of Israel is under attack. It's a very scary situation to be in," said Margo Aronovic, a 26-year-old student, in Tel Aviv.
The fatalities in Israel include a soldier killed while patrolling the Gaza border and five six civilians, including two children and an Indian worker, medical authorities said.
U.S. energy corporation Chevron said it had shut down the Tamar natural gas platform off the Israeli coast as a precaution. Israel said its energy needs would continue to be met.
At least two U.S. airlines cancelled flights from the United States to Tel Aviv on Wednesday and Thursday.
Israel, whose Ben Gurion Airport briefly suspended operations on Monday after a rocket barrage on Tel Aviv, said national airline El Al stood ready to provide supplemental flights.
Thursday's barrage on Tel Aviv prompted Israel to reroute an El Al flight from Brussels away from Ben Gurion, its intended destination, to Ramon Airport in the south. It appeared to be the first time Israel had used Ramon as a wartime alternative to Ben Gurion. A flight was previously diverted there due to bad weather, according to aviation tracker Avi Scharf.
The conflict has led to the freezing of talks by Netanyahu's opponents on forming a governing coalition to unseat him after Israel's inconclusive March 23 election.
Gaza's health ministry said 17 of the people killed in the enclave were children and six were women. The Israeli military said on Thursday that some 350 of 1,500 rockets fired by Gaza factions had fallen short, potentially causing some Palestinian civilian casualties.
Although the latest problems in Jerusalem were the immediate trigger for hostilities, Palestinians have been frustrated as their aspirations for an independent state have suffered setbacks in recent years.
These include Washington's recognition of disputed Jerusalem as Israel's capital, a U.S. plan to end the conflict that they saw as favourable to Israel, and continued settlement building.
(Additional reporting by Nandita Bose and Steve Holland in Washington and Michelle Nichols in New York; Editing by Howard Goller)