By Nidal al-Mughrabi and Jeffrey Heller
GAZA/JERUSALEM (Reuters) - Palestinian militants and Israel held their fire late on Tuesday following an Egyptian mediation effort, bringing a relative calm to the Gaza frontier after the fiercest rocket salvoes and air strikes since the 2014 war.
The enemies made clear the pause was an armed stand-off rather than a long-term accommodation.
Fighting died down at 5 p.m. (1500 GMT) and a Palestinian official briefed on the negotiations said Gaza factions ceased firing as part of a deal proposed by Egypt. Israeli officials confirmed Cairo had been involved in Tuesday's arrangement.
Since Monday, Israeli air strikes had killed seven Palestinians, at least five of them gunmen, and destroyed several buildings used by Gaza's ruling Hamas Islamists.
Rocket attacks from Gaza sent residents of southern Israel to shelters, wounding dozens and killing a Palestinian laborer from the occupied West Bank.
The flare-up was triggered by a botched Israeli commando incursion on Sunday but the surge of violence has been stoked by the economic plight of the Gaza Strip, which Israel blockades in hope of isolating Hamas, an Islamist movement designated a terrorist group by the West.
The exchanges were the fiercest since the Gaza war in 2014, the third between Israel and Hamas in a decade as part of the wider Israel-Palestinian conflict. In that 50-day war, more than 2,100 Palestinians were killed Gaza, most of them civilians, along with 66 Israeli soldiers and seven civilians in Israel.
The joint command of the Palestinian armed factions in Gaza said in a statement on Tuesday they would abide by a ceasefire "as long as the Zionist enemy does the same".
Hamas, which has ruled the packed and impoverished coastal enclave since 2007, claimed victory. Spokesman Abdel-Latif Al-Qanoua said the militants had "taught the enemy a harsh lesson and made it pay for its crimes".
Israeli security minister Yuval Steinitz said after a cabinet debate lasting several hours that he knew of no formal truce.
Rather, he told Ynet TV, Israel had "landed a harsh and unprecedented blow on Hamas and the terrorist groups in Gaza, and we will see if that will suffice or whether further blows will be required".
While many Palestinians celebrated in the streets, in Israel the response was mixed. Dozens of residents of bombarded southern villages blocked an Israeli traffic junction and burned tyres in protest at what they deemed a government capitulation.
Hamas and other armed factions had fired more than 400 rockets or mortar bombs across the fenced border after carrying out a guided-missile attack on Monday on a bus that wounded an Israeli soldier, the military said.
Hamas said it was retaliating for a Israeli commando mission in Gaza on Sunday that erupted into gunfight when uncovered by militants. A Hamas commander, six other gunmen and an Israeli colonel were killed in that incident.
Israel said its Iron Dome anti-rocket system intercepted more than 100 projectiles from Gaza on Monday and Tuesday.
Responding with dozens of air strikes, Israel hit buildings that included a Hamas intelligence compound and the studios of Hamas's Al-Aqsa Television.
The Israeli military said its air attacks took out a rocket-launching squad and fired at several Palestinians infiltrating through the border fence around Gaza.
Violence has simmered since Palestinians launched weekly border protests on March 30 to demand the easing of the blockade and the right to return to land lost in the 1948 war of Israel's founding. Israeli troops have killed more that 220 Palestinians during those confrontations, which have included border breaches.
Alarmed at the bloodshed, Egypt, the United Nations and Qatar have sought ways to improve conditions in the enclave.
Israel withdrew settlers and soldiers from Gaza in 2005 but maintains tight control of its land, air and sea borders. The wider Israeli-Palestinian peace process has been stalled for several years.
In the latest violence, Israeli missiles flattened seven buildings.
Abdallah Abu Habboush, 22, said he was awakened by shouts from neighbors to get out of his residential building after what Israel terms the "tap on the roof" warning. They all gathered in a room on the first floor to wait out the attack.
"Old men who were with us fainted because of the smoke," he said.
Israel said all of the buildings targeted by the Israeli military were used by Hamas.
(Writing by Jeffrey Heller and Dan Williams; Editing by Andrew Heavens and Angus MacSwan)