Israel imposed a total siege on the Gaza Strip on Monday and cut off the water supply as it kept bombing targets in the crowded Palestinian enclave, after Hamas stunned Israel with a surprise offensive.

Gaza’s health ministry said there were dozens of Palestinians killed and wounded in Israeli air strikes on the Jabalia refugee camp. Israel has launched hundreds of strikes on Gaza since Saturday when Hamas fighters launched attacks in Israel and fired thousands of rockets at the country.

Latest developments

• Netanyahu says “we will defeat them with enormous force”
• Palestinian death toll in retaliatory strikes reaches 570
• Over 123,000 displaced in Gaza strip
• EU, Austria suspend aid to Palestine
• Hamas official says “currently no chance” of prisoner swap with Israel

The death toll in the Gaza Strip rose to 560 on Monday, the health ministry in the Palestinian enclave said.

The Hamas-controlled ministry said “570 people were killed and another 2,900 injured” in the fighting that began on Saturday after Hamas fighters fired thousands of rockets in Israel in a surprise dawn offence.

Israeli Prime Minister Benjamin Netanyahu threatened that “what Hamas will experience will be difficult and terrible … We are going to change the Middle East.”

“This is only the beginning,” he said. “We will defeat them with force, enormous force.”

Earlier, Netanyahu warned Gaza civilians to get away from all Hamas sites, which he vowed to turn “to rubble”.

Defence Minister Yoav Gallant said Israel would impose a “complete siege” on the long blockaded enclave and stressed what this meant for its 2.3 million people: “No electricity, no food, no water, no gas — it’s all closed.”

123,000 people displaced in Gaza: UN

More than 123,000 people have been displaced in the Gaza Strip since fighting began, the United Nations said. “Over 123,538 people, have been internally displaced in Gaza, mostly due to fear, protection concerns and the destruction of their homes,” said the UN’s humanitarian agency, OCHA.

More than 73,000 are sheltering in schools, OCHA said, some of which have been designated emergency shelters.

Adnan Abu Hasna, a spokesman for the UN agency for Palestinian refugees (UNRWA), said he expected the numbers to rise further.

“There’s electricity in these schools, we provide them with a meal, clean water, psychological support and medical treatment,” he told AFP.

Gaza is home to 2.3 million Palestinians, who have lived under a crippling Israeli blockade imposed after Hamas took power in 2007.

At least seven Palestinians were killed in two Israeli air strikes on two houses in Gaza, according to medics. Israeli planes also carried out dozens of air strikes, many in the northern town of Beit Hanoun. The Associated Press reported that 19 members of a single family were killed in one such strike.

The situation is unbearable,“ said Amal al-Sarsawi, 37, as she took shelter in a school classroom with her terrified children.

Minors in war zone have felt their sense of safety “ripped away” said Jason Lee of charity group Save the Children. “Our teams and their families are terrified, they feel like sitting targets. Children across the region are in constant fear.”

Lebanon border clash

Middle East tensions have spiked as Israel’s arch-enemy Iran and their Lebanese ally Hezbollah have praised the Hamas attack, although Tehran rejected any role in the military operation.

Hamas has called on “resistance fighters” in the occupied West Bank and in Arab and Islamic nations to join its “Operation Al-Aqsa Flood”, launched half a century after the 1973 Arab-Israel war.

“The military operation is still continuing,” Hossam Badran, a Hamas official, told AFP from Doha, adding that “there is currently no chance for negotiation on the issue of prisoners or anything else”.

The United States has pledged “rock solid” support for Israel and said it would send munitions and military hardware to its key ally and divert an aircraft carrier group to the eastern Mediterranean.

Israel, which has long prided itself on a high-tech military and intelligence edge in its many conflicts, has been shaken to the core by Hamas’s unprecedented attack.

It now faces the threat of a multi-front war after Hezbollah launched guided missiles and artillery shells from the north on Sunday “in solidarity” with Hamas, in what some observers considered a warning shot.

On Monday, the Israeli army said its soldiers had “killed a number of armed suspects” who had crossed the border from Lebanon and that Israeli helicopters were striking targets in the area.

300,000 reservists called

Chief military spokesperson Rear-Admiral Daniel Hagari said Israel has drafted a record 300,000 reservists and is “going on the offensive”.

Hagari said control of border villages and towns in which there were Palestinian fighters had been re-established but that isolated clashes continued as some gunmen remained active.

“We are now carrying out searches in all of the communities and clearing the area,” he said in a televised briefing.

Military officials had previously said that their focus was on securing Israel’s side of the border before carrying out any major escalation of the counter-offensive in Gaza.

Hagari said 300,000 reservists have been called up by the military since Saturday, a number suggesting preparations for a possible invasion - though any such plans have not been officially confirmed.

“We have never drafted so many reservists on such a scale,” he said. “We are going on the offensive.”

Hagari confirmed media reports that 700 people had been killed on Israel’s side of the border, including 73 confirmed members of the security forces. He said Israel’s military had killed hundreds of Palestinian gunmen.

Relentless bombardment

Fighter jets, helicopters and artillery struck over 500 Hamas and Islamic Jihad targets in the Gaza Strip overnight, with targets including Hamas and Islamic Jihad command centres and the residence of senior Hamas official Ruhi Mashtaa who allegedly helped direct the infiltration into Israel.

Oil prices were up more than $3 a barrel in Asian trade on Monday as the violence deepened political uncertainty across the Middle East and raised concerns about supplies from Iran.

Iran is an ally of Hamas and while it congratulated Hamas on the attack, its mission to the United Nations said Tehran was not involved in the attacks.

Any sustained rally in oil prices would act as a tax on consumers and add to global inflationary pressures, which weighed on equities as S&P 500 futures shed 0.7pc and Nasdaq futures lost 0.6pc.

Several international air carriers have suspended flight services with Tel Aviv in light of the Hamas attack, saying they are waiting for conditions to improve before resuming.

Beyond blockaded Gaza, Israeli forces and Lebanon’s Iran-backed Hezbollah militia exchanged artillery and rocket fire on Sunday, while in Egypt, two Israeli tourists were shot dead along with a guide.

Appeals for restraint came from around the world, though Western nations largely stood by Israel.

The Palestinian foreign ministry denounced what it called a “barbarous campaign of death and destruction” by Israel.

“As an occupying power, Israel has no right or justification to target the defenceless civilian population in Gaza or elsewhere in Palestine,” it said on Sunday.

In southern Israel, Hamas gunmen were still fighting Israeli security forces after their surprise assault with rocket barrages and bands of gunmen who overran army bases and invaded border towns.

“It’s taking more time than we expected to get things back into a defensive, security posture,” Lt Col Richard Hecht told a briefing with journalists.

Aid to Palestine suspended

The EU has halted development aid payments to the Palestinians and is placing 691 million euros ($728 million) of support “under review” after the Hamas assault on Israel, Brussels said today.

“The scale of terror and brutality against Israel and its people is a turning point. There can be no business as usual,” European Union Commissioner for Neighbourhood and Enlargement Oliver Varhelyi posted on social media.

“As the biggest donor of the Palestinians, the European Commission is putting its full development portfolio under review, worth a total of 691 million euros ($728 million),” he added, in a message confirmed by a commission spokesman.

Earlier, Austria also announced it is suspending its aid to Palestinians, totalling around 19 million euros ($20 million) for a handful of projects, in response to Hamas’s incursion on Israel.

Neutral Austria’s ruling conservatives have adopted one of the most pro-Israel stances in the European Union in recent years. The Israeli flag has been hoisted above the chancellor’s office and the Foreign Ministry after the shock Hamas offence launched from the Gaza Strip on Saturday.

“The extent of the terror is so horrific … that we cannot go back to business as usual. We will therefore put all payments from Austrian development cooperation on ice for the time being,” Foreign Minister Alexander Schallenberg told ORF radio in comments confirmed by a spokeswoman, adding the estimate of funds and projects affected.

On Sunday, neighbouring Germany debated whether it should stop aid to Palestinians following the Hamas attack, with Development Minister Svenja Schulze of the ruling Social Democrats saying the government had always been careful to check that the money was only used for peaceful ends.

Schallenberg said Austria would assess its projects before deciding how to proceed in consultation with partners within and outside the EU.

Biden speaks to Netanyahu

US President Joe Biden spoke to Israeli Prime Minister Benjamin Netanyahu for the second straight day on Sunday, saying in a post on the social media platform X that he expressed “my full support for the people of Israel in the face of an unprecedented and appalling assault by Hamas terrorists”.

The United States led Western denunciations of Hamas’ attack, with Biden issuing a warning to Iran and others that this was “not a moment for any party hostile to Israel to exploit these attacks”. US Defence Secretary Lloyd Austin said he had ordered the USS Gerald R. Ford Carrier Strike Group to the eastern Mediterranean as a show of support to Israel.

In Gaza, Hamas spokesperson Hazem Qassem condemned the US announcement as “an actual participation in the aggression against our people”.

The violence may undermine US-backed moves towards normalising relations between Israel and Saudi Arabia — a security realignment that could threaten Palestinian hopes of self-determination and hem in Hamas’ alleged main backer, Iran.

Tehran’s other main regional ally, Lebanon’s Hezbollah, fought a war with Israel in 2006 and said its “guns and rockets” stand with Hamas.

The escalation follows surging violence between Israel and Palestinian fighters in the Israeli-occupied West Bank, where a Palestinian Authority exercises limited self-rule, opposed by Hamas.

Conditions in the West Bank have worsened under Netanyahu’s hard-right government, with more Israeli raids and assaults by Jewish settlers on Palestinian villages, and the Palestinian Authority called for an emergency Arab League meeting.

Hamas leader Ismail Haniyeh said the assault would spread to the West Bank and Jerusalem. Gazans have lived under an Israeli-led blockade for 16 years, since Hamas seized control of the territory in 2007.

“How many times have we warned you that the Palestinian people have been living in refugee camps for 75 years, and you refuse to recognise the rights of our people?” Haniyeh said.

The UN appealed for the creation of humanitarian corridors to bring food into Gaza and said at least 70,000 Palestinians in Gaza are seeking shelter in schools it runs.