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The Israel Air Force on Sunday bombed dozens of smuggling tunnels along the Philadelphi Route, along the Gaza Strip's border with Egypt.

Earlier Sunday, Israel Defense Forces soldiers advanced into a suburb of the densely-populated Gaza City, as Israel pressed on with its offensive against Hamas in the coastal strip.

Palestinian medical officials said at least 21 Palestinians were killed in fighting by midday on Sunday.

The location of the ground fighting, on the southwest side of the Hamas-ruled territory's biggest population center, suggested Israel was intensifying a more than two-week-old offensive. Troops had previously kept to the outskirts of urban areas in Gaza.

Hamas and the smaller militant group Islamic Jihad claimed they ambushed the IDF troops in the city's Sheikh Ajleen neighborhood. It appeared to be one of the fiercest land battles since Israel sent ground forces into Gaza on Jan. 3.

At least 14 people were killed in and around Sheikh Ajleen, Palestinian health officials said. It was not immediately clear how many of the fatalities were militants and how many werecivilians. There was no word of Israeli casualties.

Witnesses said earlier that Hamas militants fired anti-tank missiles and mortar bombs at advancing Israeli forces who responded with tank shells and air strikes.

Also Sunday, the sixteenth day of Operation Cast Lead, an Israel Air Force strike targeting a car on a coastal road killed two militants, according to medical workers.

IAF attacks 60 targets across Gaza

IAF aircraft attacked over 60 targets throughout the Gaza Strip, including a mosque in the southern Gaza city of Rafah. The building was used for storing weaponry such as machine guns and sophisticated anti air-craft missiles, the army said.

The mosque was also reportedly used as a training camp and a gathering place for Hamas militants.

Overnight, IDF Infantry, tanks, combat engineers, artillery, and intelligence, continued to operate against Hamas targets throughout the Gaza Strip, according to the army.

Ground forces were involved in a number of incidents in which several armed gunmen were hit.

Sunday's battles came after a senior Israeli military commander involved in the Gaza operation said on Saturday that Hamas militants are suffering from exhaustion and are deserting battle.

The IAF also targeted on Sunday the home of Ahmed Jabri, the head of Hamas' military wing, according to the army.

Meanwhile, Palestinian medical workers said IDF artillery shelling of two villages in southern Gaza killed a Palestinian woman and set 15 houses on fire. Some 50 people are treated for burns and gas inhalation, they said.

Gaza medical personnel also said an Israeli tank fire killed five Palestinians, at least four of them civilians, in the northern Gaza Strip on Sunday.

They identified the dead from the incident in Beit Lahiya as a man and four women from two different families.

The Hamas-run Health Ministry has put the death toll in Gaza in the Israeli campaign at 846. Thirteen Israelis have been killed in the fighting, 10 soldiers, and three civilians killed by Hamas rocket fire.