A fire rages following an Israeli airstrike overnight on the southern Gaza region of Khan Yunis early on Tuesday. AFP

Israeli air strikes destroy a 12-storey building in Gaza City as Israel and Hamas exchange heavy fire, in a dramatic escalation between the bitter foes sparked by unrest at Jerusalem's flashpoint Al-Aqsa Mosque compound.

Since sundown, 28 Palestinians — including 10 children and a woman — were killed in Gaza, most by airstrikes, health officials there said. 

This was preceded by hours of clashes Monday between Palestinians and Israeli security forces, mainly in Jerusalem but also across the West Bank. More than 700 Palestinians were hurt, including nearly 500 who were treated at hospitals.

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Hundreds wounded in new Jerusalem clashes

Tree catches fire outside Jerusalems al Aqsa mosque no damage to mosque

The current violence, like previous rounds, was fueled by conflicting claims over Jerusalem, home to major holy sites of Islam, Judaism and Christianity. The rival national and religious narratives of Israelis and Palestinians are rooted in the city, making it the emotional core of their long conflict.

In the past, cross-border fighting between Israel and Hamas, the group that rules Gaza, would typically end after a few days, often helped by behind-the-scenes mediation by Qatar, Egypt and others. It was not clear if that trajectory would be repeated this time.

Israeli soldiers fire tear gas at Palestinian demonstrators during an anti-Israel protest in occupied Jerusalem. AFP

Israeli Prime Minister Benjamin Netanyahu warned on Monday that fighting could "continue for some time.” Lt. Col. Jonathan Conricus, an Israeli military spokesman, told reporters Tuesday that the military was in "the early stages” of strikes against Gaza targets it had planned well in advance.

The escalation comes at a time of political limbo in Israel.

Netanyahu has been acting as a caretaker prime minister since an inconclusive parliament election in March. He tried and failed to form a coalition government with his hardline and ultra-Orthodox allies, and the task was handed to his sworn political rivals last week. One of those rivals is Israel's defense minister who is overseeing the Gaza campaign. It is not clear if and to what extent the toxic political atmosphere is spilling over into military decision-making, though the rival camps have unanimously expressed support for striking Hamas hard.

The tensions in Jerusalem coincided with the start of the Muslim fasting month of Ramadan in mid-April. Critics say heavy-handed police measures helped stoke nightly unrest, including a decision to temporarily seal off a popular night-time gathering spot where Palestinian residents would meet after evening prayers. Another flashpoint was the Jerusalem neighbourhood of Sheikh Jarrah where dozens of Palestinians are under treat of illegal eviction by Jewish settlers.

Over the weekend, confrontations erupted at the Al-Aqsa Mosque compound in east Jerusalem, which was captured and annexed by Israel in the 1967 Mideast war. The compound, located in Jerusalem's Old City, is the third holiest site of Islam and the holiest site of Judaism.

For four successive days, Israel police fired tear gas, stun grenades and rubber bullets at Palestinians in the compound who hurled stones and chairs. Hundreds of Palestinians were hurt, requiring treatment at hospitals. Two dozen officers were also injured. At times, police fired stun grenades into the carpeted mosque.

Associated Press