Israeli troops and Hamas militants have had their first major clashes in Gaza City.
Large explosions and heavy exchanges of fire rocked the Shejaiya neighbourhood of eastern Gaza City as Israel pressed its campaign to halt Hamas rocket attacks.
Hamas said in a statement that its fighters had fired missiles at seven tanks in the same district.
The group's armed wing said that ten Israeli soldiers were killed in the clashes.
Israeli military sources confirmed that troops were involved in heavy clashes in that area, but refused to comment whether its forces had suffered casualties.
Flares lit up the skies over the blacked-out neighbourhood. Assault helicopters were also seen.
Elsewhere, French President Nicolas Sarkozy has held talks with Egyptian President Hosni Mubarak at the start of a regional tour aimed at brokering an end to the military offensive in Gaza.
The talks focussed on ‘Egyptian efforts to reach an immediate ceasefire in Gaza ... and a return to the truce between Palestinians and Israelis,’ Egypt's official MENA news agency reported.
Mr Sarkozy will head to Ramallah in the occupied West Bank later where he is due to meet Palestinian President Mahmoud Abbas before having a working dinner with Israeli caretaker Prime Minister Ehud Olmert in Jerusalem.
The French leader's visit followed similar talks between Mr Mubarak and an EU mission headed by the foreign minister of current EU president Czech Republic, and his French and Swedish counterparts.
Hamas, the target of Israel's invasion, has said it will also send a delegation to Egypt, the first such contact with key regional mediator Cairo since fighting began 10 days ago. It has left over 500 people dead.
US President-elect Barack Obama has expressed concern about the Gaza crisis but stressed he would not intervene in 'delicate negotiations' by the outgoing US administration.
Elsewhere, there are reports that five Palestinian children, all members of the same family, have been killed in Israeli fire.
Meanwhile, Israeli forces have strengthened the encirclement of Gaza City and have pushed towards Khan Younis near the border with Egypt.
Aid groups said the offensive had aggravated a humanitarian crisis for the population, who have no electricity, no water and now face dire food shortages. Hospitals are only running on back-up generators.
Three ambulance workers were killed when they were hit by a missile as they helped wounded victims, medics said.
Speaking on RTÉ Radio's Morning Ireland, Israeli ambassador to Ireland Dr Zion Evrony defended the action and denied that the offensive was intended to remove Hamas as a political entity.
