Despite the tightening Israeli cordon, however, militants still managed to fire off at least four rockets Monday morning. There were no reports of injuries, though one rocket scored a direct hit on a house in the southern city of Ashkelon.
The army announced Sunday that it had begun sending reserve units into Gaza to assist thousands of ground forces already in the territory. The use of reserves is a strong signal that Israel is planning to move the offensive, which already has killed some 870 Palestinians, into a new, more punishing phase.
Israel launched the offensive on Dec. 27, bombarding Gaza with dozens of airstrikes before sending in ground forces a week later. The operation is meant to halt years of Palestinian rocket attacks on southern Israel. Fighting has persisted despite international calls for a cease-fire. Thirteen Israelis, including 10 soldiers, have died.
With Israeli troops already surrounding Gaza's main population centers, Israeli leaders have given mixed signals on how much further the army is ready to push, saying the operation is close to achieving its goals but vowing to press forward with overwhelming force.
"Israel is a country that reacts vigorously when its citizens are fired upon, which is a good thing," Foreign Minister Tzipi Livni told Israel Radio on Monday. "That is something that Hamas now understands and that is how we are going to react in the future, if they so much as dare fire one missile at Israel."
Israeli security officials believe they have struck a tough blow against Hamas, killing hundreds of the Islamic militant group's fighters, including top commanders. The director of the Shin Bet security agency told the Cabinet on Sunday that Hamas leaders in Gaza are ready to surrender.
The army also says Hamas has been avoiding pitched battles against the advancing Israelis, resorting instead to guerrilla tactics as its fighters melt into crowded residential areas.
Maj. Avital Leibovich, an army spokeswoman, said residential neighborhoods in Gaza are riddled with booby traps and explosives, and in some cases dummies are placed at apartment entrances to simulate militants and rigged to explode if soldiers approach.
Hamas, at least publicly, has vowed to continue fighting.
Israeli ground forces made their deepest foray yet into Gaza City on Sunday, with tanks rolling into residential neighborhoods and infantry fighting urban warfare in streets in buildings with Hamas militants, Palestinian residents said.
The army "is advancing more into urban areas," Leibovich said. "Since the majority of the Hamas militants are pretty much in hiding in those places, mainly urban places, then we operate in those areas."
Israeli leaders are expected to decide in the next day or two on whether to push the offensive into a third phase — in which the army takes over larger areas of Gaza. This move would require the use of thousands of reserve units massed on the border with Gaza.
A push into densely crowded urban areas would threaten the lives of many more civilians. More than 20,000 Palestinians have already fled Gaza's rural border areas and crowded into nearby towns, staying with relatives and at U.N. schools turned into makeshift shelters.
International aid groups have repeatedly said Israel must do more to protect Palestinian civilians, who are believed to make up about half of the dead.
Defense officials said several thousand reservists were already in Gaza as part of preparations for the new phase.
Israeli President Shimon Peres thanked hundreds of reservists and wished them luck while visiting a base in southern Israel on Monday.
"I don't think Israel has ever had an army better trained, organized and sophisticated than you," he said, according to a statement released by his office.
For the time being, the units have been taking over areas cleared out by the regular troops, allowing those forces to push forward toward new targets. The officials spoke on condition of anonymity because they were discussing classified operational strategy.
Israeli government spokesman Mark Regev said Israel is "very close" to achieving its three key goals: destroying Hamas' military capabilities, ending the rocket fire and preventing it from rearming.
He would not say whether the next phase of the offensive would take place, saying in any case that the reserve units could be used against "quality targets" such as bunkers and command posts.
Early Monday, Israeli navy gunboats fired more than 25 shells at Gaza City, setting fires and shaking office buildings, including the local bureau of The Associated Press. The military said that in general, the targets are Hamas installations but had no immediate information about the shelling that began just after midnight.
German and British envoys pressed efforts to negotiate an end to the war even though Israel and Hamas have ignored a U.N. Security Council resolution calling for an immediate and durable cease-fire.
Israel is demanding an end to years of rocket attacks, as well as international guarantees to prevent Hamas from smuggling weapons into Gaza through the porous Egyptian border. This complex goal would require Egyptian or international help in shutting off the smuggling routes.
Israel has been bombing tunnels that run under the Egypt-Gaza border.
In an e-mail message early Monday, Hamas leader Ismail Radwan said his group would not consider a cease-fire before Israel stops its attacks and pulls back from Gaza. He also demanded opening of all border crossings, emphasizing the Rafah crossing with Egypt.
That would relieve economic pressure on the destitute territory but also strengthen Hamas control of Gaza, an odious prospect for Israelis who fear a halt to the fighting will just give Hamas another opportunity to re-arm.
In Cairo, Egypt's state-owned news agency reported progress in truce talks with Hamas but provided no specifics. The Middle East News Agency quoted an unnamed Egyptian official as saying talks between the nation's intelligence chief, Omar Suleiman, and Hamas envoys were "positive."
International Mideast envoy Tony Blair was in Cairo on Monday, telling reporters that "the elements of an agreement" for a cease-fire are in place.
In Paris, the French foreign minister said Monday that European military observers should be sent to Gaza to monitor any eventual cease-fire.
"There need to be European observers," Bernard Kouchner said on Europe-1 radio, adding that the group could be expanded to include monitors from other regions. He said they should include military observers, "to testify to the maintained cease-fire."
Germany's foreign minister suggested Sunday that Egypt and Israel were favorable to having international experts deployed at the Gaza-Egyptian frontier to stop arms smuggling. Kouchner, however, said Monday that "neither the Egyptians nor the Israelis want international observers on their territory for the moment."
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