Israel says soldier caught, ceasefire ends

The Israeli army says a fragile three-day ceasefire between Israel and Gaza militants is over just hours after it started, blaming it on the capture of a soldier.

In response to a question from journalists about whether the truce had ended, army spokesman Peter Lerner said: "Yes. We are continuing our activities on the ground."

"Our initial indications suggest a soldier has been abducted by terrorists in an incident where terrorists breached the ceasefire."

Earlier, intensive Israeli shelling killed at least 35 people and wounded more than 150 in southern Gaza only hours after it began.

AFP correspondents said an artillery barrage of the city of Rafah was ongoing, preventing medics from recovering the dead and wounded, after the army said militants had resumed rocket fire against Israel.

Gaza militants fired rockets and shells over the border as a three-day ceasefire that began at 1500 AEST was shattered.

An AFP correspondent reported fierce fighting in the Rafah area, and Israel's army warned residents to stay in their houses as it "pursued terrorist elements."