Israel's special forces raided Gaza's Rafah early Monday, releasing two hostages and launching "waves of strikes" that killed at least 74 Palestinians, sources from both sides said.

While celebrated as heroic in Israel, the operation stirred fear in Rafah, Gaza's southernmost city, where more than half of the Palestinian enclave's 2.3 million residents were seeking shelter from Israeli bombardments in other parts of Gaza.

Suhaib Al-Hams, director of Al-Kuwaiti Hospital in Rafah, told Xinhua that a large number of injured in his hospital suffered from traumatic amputations and bad burns amid a severe shortage of medicines.

Approximately 130 hostages remain in Gaza, with at least 30 reported killed, according to Israeli authorities.

The two released hostages – Louis Har, 70, and Fernando Simon Marman, 60, both of whom also hold Argentine citizenship – were airlifted to Sheba Hospital outside Tel Aviv. They underwent medical checkups and were in "good" medical condition.

Rafah attack fears

The overnight bombardment came as Israeli Prime Minister Benjamin Netanyahu has been hinting at Israel's imminent launch of a ground operation in Rafah.

Some Palestinians feared Israel had begun a long-expected ground offensive in Rafah.

UN Human Rights Chief Volker Turk called the prospect of an attack on Rafah "terrifying." "Those with influence must restrain, rather than enable," he said in a statement.

In addition to the pain and suffering incurred by the bombs and bullets, this incursion into Rafah may also mean the end of the meager humanitarian aid that has been entering and distributed with huge implications for all of Gaza, including the hundreds of thousands in grave risk of starvation and famine in the north, Turk said in the statement. 

Many Western leaders have expressed alarm at Israel's offensive while continuing to support the country.

European Union Foreign Policy Chief Josep Borrell on Monday suggested that the way to reduce civilian casualties would to be stop arms supplies to Israel.

A Dutch appeals court said it had blocked the export of parts of F-35 fighter jets to Israel over a "clear risk of violations of international humanitarian law" in Gaza. However, the government said it would appeal.

Britain urged Israel to agree to a truce to free its hostages, while Dutch Prime Minister Mark Rutte on a visit to Jerusalem said he had warned Netanyahu not to advance.

Ceasefire talk underway

Senior officials from the U.S., Egypt, Israel and Qatar were expected to meet in Cairo on Tuesday to work on a three-phase framework that would see the release of hostages and achieve an extended pause, sources familiar with the matter said.

Egypt said on Monday that Israeli Finance Minister Bezalel Smotrich is sabotaging Gaza ceasefire talks in Cairo.

On Saturday, Smotrich called on Netanyahu not to send an Israeli representative to Cairo for hostage talks, according to the Times of Israel news website.

In a statement released on Monday, the Egyptian Foreign Ministry said Smotrich "continues to make irresponsible and inflammatory statements, which only reveal a hunger for killing and destruction, and sabotage any attempt to contain the crisis in the Gaza Strip."

Netanyahu last week rejected Hamas' latest offer for a four-and-a-half-month ceasefire, during which all hostages would go free, Israel would withdraw its troops from Gaza and an agreement would be reached on an end to the war.

The Hamas offer was a response to an earlier proposal drawn up by U.S. and Israeli spy chiefs and delivered to Hamas by Qatari and Egyptian mediators.

Asked about the ceasefire talks, senior Hamas official Sami Abu Zuhri said on Monday, "Hamas has shown great flexibility in the talks to end the aggression and swap the captives, but the occupation is still stalling and disrespecting the efforts that are being done."

(With input from agencies)