Israel says it shot down Gaza drone as calls for truce mount
* First reported use of drone by Palestinian militants
* Mediation offers mount; Israel, Hamas say fight not over
* No sign ceasefire near after week of violence
ISRAEL said it shot down a drone from Gaza a week into its offensive earlier today, the first reported deployment of an unmanned aircraft by Palestinian militants whose rocket attacks have been regularly intercepted.
Hamas, the Islamist group which runs Gaza, said its armed wing had sent several drones to carry out "special missions" deep inside Israel - a development which, if confirmed, would mark a step up in the sophistication of its arsenal.
More than 166 Palestinians, most of them civilians, have been killed, Gaza health officials said, in seven days of fighting that has shown no sign of ending.
Israeli aircraft and naval gunboats attacked 204 targets in the Gaza Strip overnight, said the army, in the worst flare-up in Israeli-Palestinian violence in almost two years. Health officials said at least 20 people were wounded.
Palestinian militants fired more than 20 rockets into Israel, causing no casualties, the military added.
The Israeli military said the drone was intercepted near the port of Ashdod by a U.S.-built Patriot missile, used largely ineffectively by Israel against Iraqi Scud missiles in the 1991 Gulf War.
The force was trying to locate debris in the area about 25 km (15 miles) north of Gaza, and determine whether it had carried explosives.
There was no sign of any sharp escalation of Israeli attacks in the northern Gaza Strip, where Israel threatened on Sunday to step up strikes against rocket-launching sites in parts of the town Beit Lahiya and urged thousands of its residents to leave.
A U.N. aid agency said around a quarter of Beit Lahiya's 70,000 residents have fled deeper into the Gaza Strip. Al-Mezan, a Gaza-based Palestinian human rights group, said 869 Palestinian homes have been destroyed or damaged in Israeli attacks over the past week.
U.S. Secretary of State John Kerry, whose bid to broker a wider Israeli-Palestinian peace deal collapsed in April, offered on Sunday to help secure a Gaza truce.
The call was echoed by France and by Germany, which will send its foreign minister to the region on Monday. But with the United States and European Union, like Israel, shunning Hamas as a "terrorist" group, Middle Eastern intermediaries were mooted.
An Egyptian-mediated truce doused the last big Gaza flare-up, an eight-day war in 2012. Cairo is now again seeking calm, but its military-backed government is at odds with Islamist Hamas, complicating any mediation efforts.
Qatar and Turkey have also been suggested as possible truce brokers.
Gaza health officials said 138 civilians, including at least 30 children, were among the dead.
There have been no fatalities in Israel since border hostilities intensified last Tuesday. Israel's Iron Dome anti-missile system has intercepted many of the rocket salvoes.
But the persistent rocket fire has disrupted life in major cities, paralyzed vulnerable southern towns and triggered Israeli mobilisation of troops for a possible Gaza invasion if the Palestinian rockets persisted.
While allowing that a diplomatic solution could eventually be found, an Israeli official said Israel would, for now, pursue its military offensive "to restore quiet over a protracted period by inflicting significant damage to Hamas and the other terrorist groups in the Gaza Strip".
Hamas and Islamic Jihad, the second-most potent Gaza faction, made clear they would not accept a mere "calm for calm" where both Palestinian fighters and Israeli forces stand down.
"Netanyahu began this crazy war and he must end his war first," Hamas leader Izzat Al-Reshiq told Al-Arabiya television.
"There can be no ceasefire unless the conditions of the Resistance are met," he added, saying Israel had to stop blockading Gaza and free hundreds of Palestinians it rounded up in the occupied West Bank last month while searching for three Jewish seminary students who it said were kidnapped by Hamas.
Hamas neither confirmed nor denied responsibility. Rocket fire from Gaza increased during the West Bank dragnet. Tensions were further inflamed when the three teens' bodies were discovered, after which suspected Israeli avengers killed a Palestinian youth from East Jerusalem.