The cease-fire agreement between Israel and Gaza failed Friday just 90 minutes after it had begun.
Israel said Hamas militants breached the truce soon after it came into effect by apparently capturing an Israeli officer while killing two other soldiers, Reuters reported.
Renewed Israeli shelling killed more than 50 Palestinians and wounded some 220, hospital officials said. Prime Minister Benjamin Netanyahu called his security cabinet into special session and publicly warned Hamas and other militant groups they would "bear the consequences of their actions."
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The 72-hour break announced by U.S. Secretary of State John Kerry and U.N. Secretary-General Ban Ki-moon was the most ambitious attempt so far to end more than three weeks of fighting, and followed mounting international alarm over a rising Palestinian civilian death toll.
Kerry called on Hamas, which has neither confirmed nor denied it is holding the soldier, to release him immediately and unconditionally. He said he had asked Qatar, which is close to Hamas, and Turkey to help free him.
"We have urged them, implored them, to use their influence to do whatever they can to get that soldier returned," a senior State Department official told reporters travelling with Kerry. "Absent that, the risk of this continuing to escalate, leading to further loss of life is very high."
Ban condemned Hamas's reported violation of the cease-fire and demanded the release of the soldier.
The cease-fire, which began at 8 a.m. (0500 GMT), had prompted Palestinian families to trek back to battle-devastated neighbourhoods where rows of homes have been reduced to rubble.
It was to be followed by Israeli-Palestinian negotiations in Cairo on a longer-term solution.
A senior Egyptian Foreign Ministry official said the talks would start on Sunday, and that Cairo "expects the two sides to cease fire before the launch of negotiations."
The Israeli military said that 90 minutes into the truce, militants attacked soldiers searching for tunnels in the southern Gaza Strip used to infiltrate fighters into Israel.
"Out of a tunnel access point or several, terrorists came out of the ground. At least one was a suicide terrorist who detonated himself. There was an exchange of fire," said Lieutenant-Colonel Peter Lerner, a military spokesman. Two of the soldiers were killed.
"The initial indication suggests that a soldier has been abducted by terrorists during the incident," he said told reporters. Mark Regev, a Netanyahu spokesman, said Hamas was responsible for the attack.
Asked if the cease-fire was over, Lerner replied: "Yes. We are continuing our activities on the ground." He said Israeli forces were mounting an "extensive effort" to locate the officer, Second-Lieutenant Hadar Goldin, 23.
Kerry said the international community "must now redouble its efforts to end the tunnel and rocket attacks by Hamas terrorists on Israel and the suffering and loss of civilian life".
White House spokesman Josh Earnest described the soldier's apparent capture as "a rather barbaric violation of the cease-fire agreement".
The Gaza Health Ministry said more than 50 people were killed and 220 wounded by Israeli shelling after the incident near the southern town of Rafah.
There was no immediate word from militant groups on whether any were holding the officer. Sami Abu Zuhri, a spokesman for the dominant Hamas movement in Gaza, said Israel was trying to mislead the world and "cover up its Rafah massacre".
Netanyahu spoke by telephone with Kerry and told him "the Palestinians had blatantly breached the humanitarian cease-fire" and attacked Israeli soldiers.
"Israel will take all necessary steps against those who call for its annihilation and terrorise its citizens," a statement from Netanyahu's office quoted him as saying.
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