IDF tanks and IAF jets bombarded Gaza Strip while soldiers clashed with terrorists within the coastal enclave as Operation Protective Edge entered its 12th day.
The IDF also said Gaza-based terrorists had used up or lost about half of their rockets - though the Hamas says they have been replenishing their arsenal. Earlier in Saturday, two soldiers were killed after Hamas terrorists attempted to enter Israel through a tunnel.
According to the IDF, the military is now focusing on targets in central and northern Gaza. The attack could be a possible sign the military plans to expand its ground operation in Gaza.
Meanwhile, paratroopers fighting in Gaza ran into a Hamas terrorist attempting to exit one of the underground tunnels crisscrossing the Strip. The terrorists opened fire at the forces and a gun fight which eventually killed the terrorists ensued.
Earlier in the day, soldiers reportedly killed two terrorists who had fired anti-tank missiles at the forces.
The army also claimed that since the ground operation began, some 34 terror tunnels were discovered, 20 just in the last 24-hours, and five of which had exit-points within Israel. Some 13 Gaza terrorists were arrested and over 450 targets were hit in IAF strikes.
Gaza Health Ministry spokesman Ashraf al-Kidra said the new round of strikes raised the death toll from the 12-day offensive to more than 330 Palestinians, many of them civilians and nearly a fourth of them under the age of 18.
The IDF said Palestinian fighters had fired at least 1,705 rockets out of an estimated stockpile of about 10,000, a depletion of about 17 percent.
"I think that we have hit and destroyed 30 to 40 percent of the rockets," chief military spokesman Brigadier-General Moti Almoz said, referring to an Israeli offensive on Gaza that escalated on Thursday.
Hamas does not publish details on their arsenals or deployment, but have said they are restocking as the conflict continues and are ready for a protracted war.
Reaching as far as Tel Aviv and beyond, the rockets have jarred Israelis. They have killed just one person - Eitan Barak - during this conflict, as their relative inaccuracy and the success of the Iron Dome rocket interceptor, civilian air raid sirens and shelters kept the casualty rate in check.
Another Israeli, Aluj Aday, was killed by a rocket fired from Gaza which hit near Dimona Saturday.
Hamas has accused Israel of hiding its losses and on Saturday dismissed the Israeli incursion into the Gaza Strip.
"The ground invasion has failed to achieve any goals and (our) heroic resistance has destroyed the image of Israeli deterrence to a great extent," said Hamas spokesman Sami Abu Zuhri.
In Israel, a Gaza rocket killed a man near the southern city of Dimona and wounded four people, police spokesman Micky Rosenfeld said, marking the second Israeli civilian casualty from the fighting. An Israeli soldier was killed after the start of the ground operation, likely from friendly fire.
The military also said it has hit 2,350 targets in Gaza, including 1,100 rocket launchers, during the 12 days of fighting. Militants have fired more than 1,600 rockets since July 8.
"We have struck hard on the two main strategic assets of Hamas: the rockets and these tunnels," IDF spokesman Lt. Col. Peter Lerner said.
The IDF began mobilizing large forces near the Gaza border on Saturday afternoon, for a possible expansion of its ground operation inside the coastal Strip hours after unearthing a series of tunnels believed for suspected use in terror attacks.
Israel sent its ground troops into the area late Thursday night, after the aerial bombardment stage of what it calls Operation Protective Edge failed to halt rocket fire on its southern and central communities. Israel says it has encountered little resistance on the ground so far, and has killed about 20 militants in sporadic gunbattles.
But two IDF soldiers were moderately wounded Saturday when troops traded fire with Palestinian snipers in the northern Gaza Strip. The two were taken to the Soroka Medical Center in Be'er Sheva.
Meanwhile, IDF soldiers in tanks and bulldozers dug in across a mile-wide strip of eastern Gaza on Saturday. The military said its engineers were concentrating on an effective buffer-zone 2.5 km (1.5 mile) wide and were looking to destroy the tunnels dug in secret by Hamas after the last major fighting there in 2012.
The IDF acknowledged that there was a de facto buffer zone in eastern Gaza, but said other military operations continued. IDF Spokesman Brigadier General Moti Almoz also signaled that the forces conducting the unearthing mission would not stay permanently.
IDF spokesman, Lt. Col. Peter Lerner said 13 tunnels, at least one of them 30 meters deep, and 95 rocket launchers were found and destroyed since the Gaza ground incursion began. The military also said it had thwarted a second infiltration attempt through such a tunnel, killing one militant and forcing the others to return to Gaza. On Saturday morning, a terrorist was killed in the Eshkol region of Israel after infiltating from Gaza.
"We have struck hard on the two main strategic assets of Hamas: the rockets and these tunnels," Lerner said. Searches were continuing in what he described as an open-ended mission that had "severely impeded Hamas capabilities".
"I can't promise that when we leave the territory we will have exposed all of the tunnels," he told Army Radio.
Matan Tzuri, Elior Levy, Roi Kais and Reuters contributed to this report