The Palestine Red Crescent Society reported intense artillery fire near the city's Al-Amal hospital, while the health ministry in Hamas-run Gaza said 77 people were killed and dozens wounded overnight.
At the city's Al-Nasser hospital, a child with a bloodied face cried on a gurney. Ambulances arrived with the injured and the dead while in the darkened city beyond, automatic weapons fire sounded.
An orange fireball flashed above rooftops and an AFP journalist saw plumes of dark smoke towering above the city in nearby Rafah, the Strip's southernmost city.
Israel says it still expects the war, which began with unprecedented Hamas attacks on October 7, to continue for months.
The United Nations says it has displaced roughly 85 percent of Gaza's people and warns improved aid access is needed urgently as famine and disease loom.
UNICEF said nearly 20,000 babies in Gaza have been born "into hell" since October 7, describing mothers bleeding to death.
A communications blackout, which internet monitor NetBlocks said has stretched into its eighth day, the longest outage during the war, only worsens the challenges.
Metawei Nabil, recently released by Israeli forces and bearing scars on his arms, told AFP he fled Beit Lahia in northern Gaza only "to face death" in devastated Rafah near the Egyptian border.
- Among the rubble -
The October 7 attacks resulted in the deaths of about 1,140 people in Israel, most of them civilians, according to an AFP tally based on official Israeli figures.
Militants also seized about 250 hostages, around 132 of whom Israel says remain in Gaza. At least 27 hostages are believed to have been killed, according to an AFP tally based on Israeli figures.
Israel has vowed to destroy Hamas in response. Its relentless air and ground offensive has killed at least 24,762 Palestinians, around 70 percent of them women, young children and adolescents, according to Gaza's health ministry.
With Israel's military offensive moving farther south in the territory, which is about 40 kilometres (25 miles) long, some residents in northern Gaza have begun returning home to what remains of their neighbourhoods.
In Gaza City's Rimal district, rubble has been ploughed to the sides of some dirt roads but others are still clogged with pieces of collapsed buildings.
"Everything is destroyed and the people are dying of hunger," said Ibrahim Saada, who said he lost his whole family.
Israel's army in early January said the Hamas command structure in northern Gaza had been dismantled, but groups of isolated fighters still confront troops there.
On Friday the military said ground troops backed by air support had killed several armed militants in the north. A Hamas statement reported combat in the north's Jabalia refugee camp and nearby Gaza City area.
The Israeli army reported 194 troops deaths since the beginning of ground operations in Gaza in October.
- Huthi missiles -
The UN human rights representative in the Palestinian territories said Israeli forces may have detained thousands of Gazan men since October 7 and subjected some to humiliating conditions potentially amounting to torture.
Some reported being blindfolded, beaten and ultimately freed wearing only diapers, Ajith Sunghay said on Friday.
The Israeli military told AFP individuals suspected of involvement in "terrorist activity" were detained, treated in accordance with international law and released if found innocent.
Clothes are removed and not immediately returned for security reasons, but detainees receive them when it is possible, the military added.
The Gaza war has already spilled into the surrounding region where Iran-aligned groups have carried out attacks, with regular exchanges of cross-border fire between Israeli forces and Lebanon's Hezbollah movement.
On Friday the Israeli army said it struck Hezbollah posts and infrastructure in southern Lebanon and intercepted a drone that crossed from Lebanon into Israel's maritime area.
Lebanon's official news agency NNA said Israel's air force destroyed three houses in the village of Kfar Kila, while Hezbollah claimed three attacks against Israeli positions.
Israel's army said "the security situation on the northern border must change... either through military action or through diplomatic means".
Israeli tanks also hit "military infrastructure belonging to the Syrian army" on Thursday, after munitions were fired toward the Israeli-occupied Golan Heights, the military said.
A wider conflagration has so far been averted but such fears have also been accentuated by Yemeni rebels' missile and drone fire against shipping in the Red Sea area, prompting retaliatory strikes by US forces.
Yemen's Huthi movement is targeting what it deems Israeli-linked vessels in support of Palestinians in Gaza.
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