Exchanges of fire triggered by Israel's targeted killing of a top militant in Gaza killed 16 Palestinians on Wednesday, with the violence showing little sign of easing. After an overnight lull, rocket fire toward Israel resumed and Israeli aircraft conducted retaliatory strikes.

The total death toll in the coastal enclave rose to 26 since Tuesday, including three children, and more than 70 people were injured, according to Gaza's health ministry.

On Wednesday afternoon, Israel said it targeted two Islamic Jihad militants preparing to fire anti-tank missiles. And the Palestinian Islamic Jihad (PIJ) group on late Wednesday offered terms for a ceasefire, which included an end to Israel's targeted killings of militants and Gaza border protesters and well as steps to ease the blockade of the Palestinian enclave. Israel has so far made no public comments on the truce offer.

According to the Israeli army, at least 360 rockets have been fired into Israel from Gaza since Tuesday, and 90 percent of the missiles were intercepted. The Israel Defense Forces (IDF) said it had bombed more PIJ targets in Gaza on Wednesday in response, including a military headquarters in Khan Younis and a factory manufacturing warheads for long-range rockets in the south of the strip. The IDF also claimed  it killed "20 terrorists," and most of them are from Islamic Jihad.

UN Middle East peace envoy Nickolay Mladenov warned that the continuing escalation was "very dangerous." He arrived in Cairo on Wednesday afternoon, following reports he was to hold talks on halting the fighting. The UN and Egypt have been instrumental in mediating previous ceasefires between Israel and Gaza-based militants. But experts warned that the risk of further escalation remained high.

Israeli Prime Minister Benjamin Netanyahu said Islamic Jihad must stop its rocket attacks or "absorb more and more blows." He reiterated Israel would respond to attacks "without mercy."

Islamic Jihad spokesman Musab al-Barayem said the group was not interested in mediation for now as it retaliated to the killing of one of its commanders.

A pre-dawn Israeli targeted strike early Tuesday on a residential building in eastern Gaza City killed Baha Abu al-Ata, a senior PIJ military commander, and his wife. At about the same time, the home of another leader of the Iran-backed group was struck by an Israeli missile in Damascus, killing two people.

Ata was viewed as a "ticking bomb" by Israel. And Israel believed he was responsible for rocket fire at Israel as well as other attacks and was planning more violence.

The flare-up raised fears of a new all-out conflict between Israel and Palestinian militants in Gaza, who have fought three wars since 2008.

(With input from AFP)