By Nidal al-Mughrabi and Dan Williams
GAZA/JERUSALEM (Reuters) - Israeli forces shelled a U.N.-run school sheltering Palestinians in the northern Gaza strip, the Gaza health ministry said on Thursday, killing at least 15 people and raising the conflict's death toll to nearly 750.
Israel Radio said, without citing a source, that most of those killed at the United Nations school were children.
The Israeli military had no immediate comment on the incident reported as a truce between the Jewish state and Hamas-led Islamist guerrillas remained elusive, despite intensive attempts at mediation.
Ashraf al-Qidra, spokesman for the Gaza Health Ministry, said that as well as the 15 dead, another 200 people were wounded in the attack. The director of a local hospital said various medical centers around Beit Hanoun in the coastal enclave were receiving the wounded.
Pools of blood lay on the ground and on students' desks in the courtyard of the school near the apparent impact mark of the shell, according to a Reuters photographer at the scene.
"Such a massacre requires more than one hospital to deal with it," said Ayman Hamdan, director of the Beit Hanoun hospital.
More than 140,000 Palestinians have fled 17 days of fighting between Israel and Gaza militants, many of them seeking shelter in buildings run by the U.N. Refugee Works Agency (UNWRA). Israeli forces are trying to stop militants from Hamas, which rules Gaza, and their allies from firing rockets into its territory.
Palestinians said residents of two southern villages were trapped by days of tank shelling, with medics unable to evacuate wounded. Hamas fired rockets at Tel Aviv and said its gunmen carried out a lethal ambush on Israeli soldiers in north Gaza. Israel earlier won a partial reprieve from the economic pain of its Gaza war with the lifting of a U.S. ban on commercial flights to Tel Aviv.
With Washington's encouragement, and the involvement of Turkey and Hamas ally Qatar, Egypt has been trying to broker a limited humanitarian ceasefire for the battered enclave.
One Cairo official said on Wednesday it could take effect by the weekend, in time for the Eid al-Fitr festival next Monday or Tuesday, Islam's biggest annual celebration at the end of the fasting month of Ramadan.
But a U.S. official described any truce by the weekend as unlikely, as did an Israeli security cabinet minister who said the army would need one to two weeks to complete its main mission of razing tunnels used by Hamas for cross-border raids.
"If the talk is of a humanitarian hiatus for - this is not pleasant to say - removing bodies, all kinds of things that are connected to the civilian population in the short-term, this might be weighed," the minister, Gilad Erdan, told Israel Radio.
"But I will oppose any ceasefire until it is clear both that the tunnels will be destroyed and what will happen in the post-ceasefire period - how we will guarantee that quiet for the residents of Israel will really be preserved in the long-term."
With the attack on the school, the death toll in Gaza reached 747 on Thursday. Israeli tank fire and pre-dawn assaults killed 35 people, including an 18-month-old baby and six members of the same family, Palestinian officials said.
BURIED BENEATH RUBBLE
In southern Khuzaa and Abassan villages, they said, Israeli shelling left dead and wounded under rubble, while medical crews could not risk approaching. Elsewhere in Gaza, a U.N. aid agency said three of its teachers were killed in Israeli air strikes.
Israel has lost at least 32 soldiers in clashes inside Gaza and with Hamas raiders who have slipped across the fortified frontier in tunnels. The military confirmed there had been a new clash on Thursday but did not immediately publish casualties.
Palestinian rockets and mortar bombs have killed three civilians in Israel. Such shelling surged last month as Israel cracked down on Hamas in the occupied West Bank, triggering the July 8 air and sea barrage on the Gaza Strip that escalated into an invasion a week ago.
Though Israel's Iron Dome rocket interceptor has shot down most of the rockets fired from Gaza, one that came close to Tel Aviv's Ben Gurion Airport on Tuesday prompted the U.S. Federal Aviation Administration (FAA) to bar American flights there.
An ensuing wave of cancellations by foreign airlines sharply reduced traffic at Israel's usually bustling international gateway at the height of the summer tourist season. It was hailed as a victory by Hamas and prompted Israeli Prime Minister Benjamin Netanyahu to appeal to the Obama administration to intervene.
The FAA canceled the ban late on Wednesday after reviewing the security situation. The European Air Safety Agency (EASA) said on Thursday it was about to follow suit and lift its own recommendation to avoid flying to Tel Aviv.
US Airways, a unit of American Airlines Group Inc, said it was resuming its non-stop Tel Aviv to Philadelphia service. Germany's Lufthansa said its suspension of flights to Tel Aviv would continue to Friday.
"The Europeans did not really deliberate over this, but acted more as a follow-up to the American decision," said Gadi Regev, chief of staff for Israel's Civil Aviation Authority.
Some European flights have been diverted to Cyprus's Larnaca airport, where passengers took Israeli carriers to Ben Gurion.
Gaza militants continued to fire rockets at Israel on Thursday, sending thousands in the country's south racing to shelters or safe rooms. There were no reported casualties.
Hamas leader Khaled Meshaal said on Wednesday that his fighters had made gains against Israel and voiced support for a humanitarian truce, but only if Israel eased restrictions on Gaza's 1.8 million people. Hamas wants Egypt to open up its border with Gaza too.
U.N. High Commissioner for Human Rights Navi Pillay said on Wednesday that there was "a strong possibility" that Israel was committing war crimes in Gaza, where medical officials say most of those killed were civilians.
Pillay also condemned indiscriminate Islamist rocket fire out of Gaza, and the U.N. Human Rights Council said it would launch an international inquiry into alleged violations.
A furious Netanyahu denounced the inquiry as a "travesty".
"The HRC should be launching an investigation into Hamas's decision to turn hospitals into military command centers, use schools as weapons depots and place missile batteries next to playgrounds, private homes and mosques," he said.
"OUTRAGE AND REGRET"
U.N. Secretary-General Ban Ki-moon, who has also been on a truce-seeking mission, lashed out at Gaza militants, expressing "outrage and regret" that rockets had been found inside a U.N. school for refugees for the second time during the conflict.
Ban said storing rockets there "turned schools into potentially military targets, endangering the lives of innocent children", along with U.N. employees and the tens of thousands of sheltering Palestinians. He urged an investigation.
U.S. Secretary of State John Kerry returned to Egypt on Wednesday after seeing Palestinian President Mahmoud Abbas in the occupied West Bank and Ban and Netanyahu in Jerusalem.
"We have certainly made some steps forward. There is still work to be done," said Kerry, on one of his busiest regional visits since Netanyahu called off U.S.-sponsored peace talks over Abbas's power-share deal with Hamas in April.
Gaza has been rocked by regular bouts of violence since Israel unilaterally pulled out of the territory in 2005.
Hamas, which rejects Israel's right to exist and is shunned in the West, balked at Egypt's proposal for an unconditional truce, saying its terms had to be met in full for any end to the conflict. Israel briefly held fire last week at Cairo's behest.
(Additional reporting by Noah Browning in Gaza, Arshad Mohammed and Yasmine Saleh in Cairo, Amena Bakr in Doha, Stephanie Nebehay in Geneva, and Thomas Seythal in Berlin; Writing by Dan Williams; Editing by Paul Taylor and David Stamp)