Israeli strikes pounded Gaza on Sunday as both sides near the end of a dark year and Prime Minister Benjamin Netanyahu warned the war sparked by Hamas's October 7 attack will last for "many months". 

At least 40 Palestinians were killed in overnight bombing in Gaza City, said the health ministry in the Hamas-run Gaza Strip, with 18 bodies recovered so far and many buried under the rubble.   

"After the explosion we arrived at the scene of the strike and saw martyrs everywhere," said one local man after a building was hit. "Children are still missing, we can't find them."

The Israeli army reported killing around a dozen enemy fighters in multiple ground battles, air and tank strikes and said it had located Hamas tunnels, and explosives planted in a kindergarten.

As heavy combat raged on, 85 percent of besieged Gaza's 2.4 million people have been displaced, according to the UN, which warns of the growing risk of hunger and disease as desperate families shelter in makeshift tents against the winter cold.

The world has for months watched on in horror as the long-running Israel-Palestinian conflict exploded into the bloodiest ever Gaza war after Hamas launched its unprecedented attack on October 7.

The Palestinian gunmen overwhelmed Gaza's high-tech border fence and burst into southern Israel in an attack that left about 1,140 people dead, mostly civilians, according to an AFP tally based on official figures.

The surprise attack — in which Hamas militants committed atrocities and dragged off some 250 hostages — blindsided and infuriated Israel and sparked a devastating military response.

Heavy bombardment, and a ground invasion launched three weeks into the war, have reduced vast areas of Gaza to a ruined wasteland and killed at least 21,822 people, mostly women and children, according to the health ministry.

More than 55,000 people have been injured, it said, at a time when most Gaza hospitals are either out of service or damaged and overwhelmed. 

The Israeli army says 172 of its soldiers have been killed inside Gaza, and Netanyahu said Israeli forces had killed about 8,000 "terrorists" so far.

Days ago, Israel said soldiers had destroyed the Gaza City hideout, connected to a vast tunnel system, of Hamas's Gaza leader Yahya Sinwar, whom they have labeled a "dead man walking".

-'Epic human suffering' –

As the war has raged, UN chief Antonio Guterres has condemned the "epic human suffering" and "collective punishment" of Palestinian civilians.

He and other world leaders have repeatedly called for a ceasefire while Israel has vowed to push on until Hamas is defeated, a position backed by its powerful ally the United States.

Netanyahu stressed again that "the war will continue for many months until Hamas is eliminated and the hostages are returned".

"We will guarantee that Gaza will no longer pose a threat to Israel," he told a news conference Saturday.

On Sunday, he vowed: "We will continue our defensive war, the justice and morality of which is without peer".

Inside Gaza, Palestinian families — many pushed into the territory's far south as the battlefront draws ever closer — are praying for a respite from the war.

"We were hoping that 2024 would arrive under better auspices and that we would be able to celebrate the new year at home with our families," said Mahmoud Abou Shahma, 33, in a camp in Rafah near Egypt.

"We hope that the war will end and that we will be able to return to our homes and live in peace."

– Desperate hostage families –

At least 129 hostages are still believed held in Gaza after more than 100 were released in a prisoner swap and week-long truce in late November. 

Families and friends of the remaining captives have rallied to keep up pressure on the government to bring them home.

"I hope there's going to be another deal, even a partial deal, or that some will be released," said one demonstrator, Nir Shafran, 45. 

"I'm trying to hold on to every shred of hope."

International mediators have continued efforts toward a new pause in fighting.

A Hamas delegation from Qatar visited Cairo on Friday to discuss an Egyptian three-phase plan proposing renewable ceasefires, a staggered release of hostages for Palestinian prisoners, and ultimately an end to the war, sources close to Hamas said.

Their allies Islamic Jihad said a day later that Palestinian factions were "in the process" of evaluating the proposal and would give a response "within days".

US news outlet Axios and Israeli website Ynet, both citing unnamed Israeli officials, reported that Qatari mediators had told Israel that Hamas was prepared to resume talks on new hostage releases in exchange for a ceasefire.

Netanyahu, asked about the process on Saturday, said Hamas had been "giving all kinds of ultimatums that we didn't accept".

"We are seeing a certain shift (but) I don't want to create an expectation," he said without elaborating.

– Multiple Mideast fronts –

Amid the Gaza war, violence has also flared in the occupied West Bank, and between Israel and some of its regional enemies, an alliance of Iran-backed groups in Lebanon, Syria, Iraq and Yemen.

Israeli forces in northern Israel have traded heavy cross-border fire with the Shiite Muslim armed group Hezbollah along the UN-patrolled frontier.

Netanyahu warned that "if Hezbollah wants to extend the war, it will be dealt blows like never before, and so will Iran".

Iran, long Israel's most bitter enemy, has welcomed the Hamas attacks but insisted it played no role in planning the October 7 assault.

Tehran last week blamed Israel for killing Razi Moussavi, a top commander of the Islamic Revolutionary Guard Corps, in a missile strike in Syria and vowed his death would be avenged.

Another Iran ally, Yemen's Huthi rebels, has launched drone and missile attacks on cargo ships in the Red Sea, saying the strikes are in support of Palestinians in Gaza.

Washington has assembled a multinational naval task force to deter such attacks.

The US military said on Sunday that American Navy helicopters sank three Huthi vessels and killed their crews after they had attacked a Denmark-owned container ship. (Adel Zaanoun and Anuj Chopra in Jerusalem)

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© Agence France-Presse