The development came as Israeli troops pushed deeper into the densely populated Gaza City on the 20th day of the offensive to rout out Hamas militants. Israeli tanks shelled the crowded downtown, sending terrified residents fleeing for cover.
Witnesses and U.N. officials said Israeli shells struck the United Nations headquarters building that serves as a shelter for hundreds of people, setting it ablaze.
The Israeli push ratcheted up pressure on Hamas to accept a proposed cease-fire. It also came as U.N. chief Ban Ki-moon was in Israel trying to promote a cease-fire.
Mark Regev said Israel wants a total end to Hamas' rocket launches into Israel, and an arms embargo on Gaza's militant rulers.
``There is momentum in these discussions,'' Regev told Associated Press Television News. ``We are hopeful that a deal will be based on a total cessation of Hamas fire into Israel and an arms embargo to prevent Hamas from rearming is close and attainable.''
Regev said the Israeli envoy _ Amos Gilad, who flew to Egypt on a private plane _ will discuss the ``parameters of the end game. He will not be meeting Hamas envoys who are also in town.
Gaza-based Hamas official Ghazi Hamad said the deeper incursion reflected ``pressure'' on his group.
``I think Israel is seeking in the last moments to escalate the military operation to pressure the parties,'' Hamad told The Associated Press. ``I don't think this will change the issues on the table.''
Hamad said his group has offered amendments to Egypt's original peace proposal, and he expected the Egyptians will convey them to the Israelis. ``Consultations are continuing,'' he said.
Hamas' deputy chief Moussa Abou Marzouk, who is based in Damascus, told Al-Arabiya television that Hamas demands an immediate cease-fire, to be followed by Israeli troop withdrawal and the opening of the border for humanitarian aid.
A long term truce is to be discussed later, Marzouk said, adding he expected ``clear answers'' from the Israelis through the Egyptians on Thursday.
In Tehran, Iranian President Mahmoud Ahmadinejad, Hamas' top ally, called on Saudi Arabia's King Abdullah to break his ``silence'' over Gaza and speak out over ``the massacre of your children in Gaza,'' the official Iranian news agency reported.
Saudi Arabia is overwhelmingly Sunni, as are the Palestinians.
Ahmadinejad said a firm Saudi stand would dash hopes of those who want to create rifts among Islamic countries.
In an interview Wednesday with Al-Manar television, Ahmadinejad said Arab governments should exert pressure ``on the protectors of the Zionist entity'' rather than ``putting pressure on Hamas.''
He urged Arab states to pressure Israel's Western backers to stop the fighting and to cut all ties with Israel, and also dismissed allegations Iran is urging Hamas to reject Egyptian truce efforts.
Israel says it launched the offensive Dec. 27 to stop rocket fire against southern Israeli towns by Hamas, which has controlled the Gaza Strip since 2007. Iran is Hamas' main backer, providing political and financial support. Iran denies sending Hamas weapons.
Meanwhile, an emergency summit of the six Gulf Cooperation Council countries, called by Saudi Arabia to discuss Gaza, is to take place in Riyadh later Thursday.
But a separate summit by Arab League heads of state called by Qatar for Friday in Doha was in doubt as Qatar couldn't get a two-thirds majority of the organization to attend.
Egypt and Saudi Arabia are against the Doha summit, believing it could scuttle Egyptian efforts to broker a truce between Israel and Gaza's Hamas rulers.
Gaza medical officials say 1,100 Palestinians have been killed since Israel's offensive started Dec. 27.
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