"It was a very hard battle there," a senior Israeli military official said. "I have to admit that we were facing good fighters from the other side."
The seven-hour attack by Israeli artillery and tank shells, followed by small-arms gun battles in the streets, left the district in ruins. There were bodies in the streets and gray-faced Palestinians being dug out of the rubble and stacked into ambulances. Thousands of residents had fled in the middle of the night, many barefoot.
The Gaza Health Ministry said 70 Palestinians were killed in the fighting in the Shijaiyah district on the eastern outskirts of Gaza City, the new front line. In all, more than 100 Palestinians died Sunday. Hamas health officials, in keeping with their practice, did not say whether the dead were civilians or fighters.
Sami Abu Zohri, a Hamas spokesman, called the Israeli offensive in Shijaiyah "a massacre" and "a war crime."
More than 445 Palestinians, many of them women and children, have died in the nearly two-week-long offensive.
The Hamas military also announced that its fighters had captured an Israeli soldier. Abu Obaida, a spokesman for the Izzedine al-Qassam Brigades, appeared on Hamas TV to announce that the soldier had been taken prisoner. Minutes later, there were fireworks on the streets and shouts of "God is great!" from loudspeakers in the mosques.
An Israeli military spokesman said the army was investigating the claim and did not confirm the abduction.
It was the single worst day so far for Israelis. Israeli military deaths have risen to 18 since the armed forces launched a ground operation Thursday. Two of the Israeli soldiers were U.S. citizens. The Israeli death toll is now higher than during the Israeli military's 2009 incursion into Gaza, when 13 Israelis were killed.
More than 77 soldiers have entered hospitals countrywide, some of them seriously wounded.
President Barack Obama, in a phone call with Israeli Prime Minister Benjamin Netanyahu, "raised serious concern about the growing number of casualties," according to the White House. Secretary of State John Kerry's office announced he would fly to Cairo on Monday, seeking international help in brokering a cease-fire.
The U.N. Security Council held an emergency session Sunday night to discuss the crisis.
Seven Israeli troops from the Golani Brigade were killed in the streets of Shijaiyah by Gaza militants who detonated an antitank mine beneath their armored vehicle. Three soldiers were fatally shot in ambushes and firefights, and three died trapped in a burning building, military spokesmen said.
"The heart of the entire nation is with the families of the fallen," Netanyahu said at a news briefing at the Israeli defense headquarters in Tel Aviv, held before news of the alleged capture broke.
"We feel your pain. We bow our head to your sons who fell so that we can continue living here," the prime minister said. "We are not deterred, and we will continue to act as necessary. The current operation is necessary for the security of Israel's citizens."
When soldiers of the Golani Brigade entered Shijaiyah, Hamas militants were prepared to ambush them, the senior Israeli military official said in a briefing with foreign correspondents Sunday night.
The Israeli military had warned residents a few days earlier of the impending push into the neighborhood and told them to evacuate. The militants used that information to their advantage.
"They knew exactly when and where to wait for us," said the official, who spoke on the condition of anonymity because of military protocol.
Hamas militants, he added, were better fighters than the Israelis had anticipated. They were "highly trained" and "very well equipped" with sophisticated weapons systems. They accurately fired light and heavy weapons, including mortars, at the Israeli forces while "setting up a lot of booby traps," he said.
The fighting in Shijaiyah lasted for more than seven hours, the official said. Many civilians had remained in the enclave because Hamas fighters had ordered them not to leave, effectively employing them as human shields, the Israeli official said.
Residents, however, said they had been told to move before by the Israelis, only to return to their homes. Some said they were reluctant to leave their homes just because the hated Israelis told them to.
Sunday morning, the streets of Gaza City filled with thousands of panicked residents pouring out of Shijaiyah during a lull in the battle. Many sought shelter at Shifa Hospital, Gaza's main medical center, where the emergency rooms were overflowing and surgeons were treating patients in the corridors.
The Red Crescent humanitarian organization announced it had negotiated a two-hour cease-fire in the afternoon that allowed ambulances access to Shijaiyah. In 10 minutes, on one street, seven stretchers were carried out of the rubble. Some of the injured looked near death.
Also darting from house to house were militants dressed in black, their faces covered with kaffiyeh scarves, carrying Kalashnikov rifles. One trio ran past a group of reporters and entered a house down the lane.
Israeli Economy Minister Naftali Bennett, one of the coalition government's hard-liners and a former company commander of special forces, said, "I do not rule out the goal of toppling the Hamas regime" that governs Gaza.
"There is a world of weapons tunnels penetrating into Israel, creating the possibility of a mega-attack," Bennett said.
Capt. Eytan Buchman, an Israeli military spokesman, said the armed forces had no intention of reoccupying Gaza, which they pulled out of in 2005. He said the main objective of the ground offensive hadn't changed: to destroy the tunnel network and rocket launchers that Hamas militants have used to attack Israel.
"We've expanded the forces on the ground in order to accomplish that mission," Buchman said. "All of Gaza is an underground city, and the amount of infrastructure Hamas built up over the years is immense. There are tunnels, extended bunkers, weapons storage facilities, even within urban areas."
The Israeli military said Shijaiyah had also been targeted because 8 percent of all rockets fired by Hamas and other militant groups into Israel since the conflict began have come from the town.
Obama and Netanyahu spoke on the telephone Sunday, their second call in three days to discuss Gaza.
According to the White House, Obama "reiterated the United States' condemnation of attacks by Hamas against Israel, and reaffirmed Israel's right to defend itself."
Raghavan reported from Tel Aviv. Eglash reported from Kfar Aza, Israel. Washington Post correspondents Islam Abdel Karim in Gaza also contributed to this report.