The rocket fire from Hamas was its first military response to the growing civilian death toll from Israel's resumption of aerial bombardment and ground operations in Gaza this week.
Late Thursday the military said troops had begun “conducting ground activity” in the Shabura area of Rafah, Gaza’s southernmost city near the Egyptian border.
Israel earlier said it had closed off the territory's main north-south route as part of expanding ground operations that resumed on Wednesday.
The toll is among the highest since the war started more than 17 months ago with Hamas's attack on Israel.
The Israeli army said it intercepted a missile launched from Yemen, where Iran-backed rebels say they act in support of the Palestinians, for the second time within a day.
Israel’s military said an air strike had “in recent days” killed Rashid Jahjouh, the head of Hamas’s internal security agency.
“They are targeting civilians, not fighters,“ he said among the rubble.
Military spokesman Avichay Adraee said on X that Israeli troops “have begun a targeted ground operation in the central and southern Gaza Strip in order to expand the security zone between the northern and southern parts”.
Palestinians were seen fleeing south along a section of Salaheddin Road still open, near central Gaza's Nuseirat refugee camp, atop donkey-drawn carts piled high with belongings.
Government spokesman David Mencer said Israel controlled central and southern Gaza and was “expanding the security zone” and creating a buffer between the north and south.
The official said Israeli tanks had deployed at the junction after the withdrawal of American private security contractors stationed there since the pullback of Israeli forces in February, under the ceasefire.
Israel rejected negotiations for a second stage, demanding the return of all remaining hostages under an extended first stage. Hamas insisted on engaging in talks for phase two.
'Unthinkable'
Speaking before the UN Security Council, former hostage Eli Sharabi called on the world to “bring them all home”, referring to the dozens still held by Gaza militants.
Resumption of fighting in Gaza has coincided with a reignited protest movement by Israelis who see Netanyahu's policies -- including his move to fire the internal security agency chief -- as a threat to democracy.
He also called it “unthinkable to resume fighting while still pursuing the sacred mission of bringing our hostages home.”
Iran’s supreme leader Ayatollah Ali Khamenei called Israel’s latest strikes on Gaza a “catastrophic crime” and said the United States “shares responsiblity”.
The overall death toll in Gaza since the start of the war is 49,617, according to the Hamas-run territory's health ministry.
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