* Gaza rocket hits Israeli house, kills three
* Hamas shocked by killing of top commander, vows revenge
* U.N. Security Council calls for end to violence
Hamas fired dozens of rockets into southern Israel on Thursday, killing three people, and Israel launched numerous air strikes across the Gaza Strip, threatening a wider offensive to halt repeated Palestinian salvoes.
Israeli police said the three died when a Palestinian rocket hit a four-story building in the town of Kiryat Malachi, some 25 km (15 miles) north of Gaza. They were the first Israeli fatalities of the latest conflict to hit the coastal region.
Israel on Wednesday assassinated Hamas's military mastermind and shelled the enclave from the land, sea and air, killing 13 people, including five militants, three children and a pregnant woman. More than 100 were wounded.
The U.N. Security Council held an emergency meeting late on Wednesday to discuss the Israeli assault. It called for a halt to the violence, but took no action.
Expecting days or more of fighting, Israel warned Hamas that all its men were in its sights and dropped leaflets in Gaza telling residents to keep their distance from militants and Hamas facilities.
"The leaflets stress that Hamas is dragging the region toward violence, and that the IDF is prepared to defend the residents of the State of Israel until quiet is restored to the region," the military said in a statement.
Israel weathered censure from influential Arab powers Egypt and Qatar. The United States condemned Hamas, shunned by the West as an obstacle to peace for its refusal to renounce violence and recognise Israel.
Hamas has said the killing of its top commander, Ahmed Al-Jaabari, would "open the gates of hell" for Israel. It also appealed to neighbouring Egypt to halt the "barbaric" assault.
"PILLAR OF DEFENCE"
Israeli Prime Minister Benjamin Netanyahu, whom opinion polls favour for victory in a Jan. 22 general election, said on Wednesday the Gaza operation could be stepped up.
His cabinet has granted authorisation for the mobilisation of military reserves if required to press the offensive, dubbed "Pillar of Defence" in English and "Pillar of Cloud" in Hebrew after the Israelites' divine sign of deliverance in Exodus.
The assault came after a week of surging cross-border violence and defied hopes that Egypt had brokered a truce.
Within hours of a missile destroying Jaabari's car, militants fired a slew of rockets against the Jewish state's desert south.
Israel's military reported that its Iron Dome interceptor had shot down more than 30 of the missiles.
Israel said it had destroyed much of Gaza's longer-range rocket stockpiles, an assertion seemingly confirmed when Hamas claims of hits on ambitious targets like Tel Aviv, Israeli naval craft and secret intelligence bases proved unfounded.
Egypt, whose new Islamist-rooted government pledged to honour the 1979 peace treaty with Israel, condemned the new Israeli raids as a threat to regional security. It recalled its ambassador from Israel and called for an emergency session of the U.N. Security Council.
Pro-Western Qatar demanded the Israelis be "punished" and the Arab League called a meeting to discuss Gaza on Saturday.
The United States, by contrast, placed the onus for the Gaza escalation on Hamas and said it backed Israel's "self-defence".
"There is no justification for the violence that Hamas and other terrorist organisations are employing against the people of Israel," said Mark Toner, deputy State Department spokesman.
The flare-up on Israel's southern front came in a week when, up north, it fired at Syrian artillery positions it said had shot into the Israeli-annexed Golan Heights amid a civil war in Syria that has brought renewed instability to Lebanon next door.
A second Gaza war has loomed on the horizon for months as waves of Palestinian rocket attacks and Israeli strikes grew increasingly more intense and frequent.
Israel's Operation Cast Lead in 2008-2009 began with a week of air attacks and shelling, followed by a land invasion of the blockaded coastal strip, sealed off at sea by the Israeli navy. Some 1,400 Palestinians were killed and 13 Israelis died.
Hamas has been emboldened by the Islamist rise to power in Egypt, viewing President Mohamed Mursi as a "safety net" who will not permit a second Israeli thrashing of Gaza, home to 1.7 million Palestinians.
Hamas is also supported by Iran, which Israel regards as a rising threat to its own existence due to its nuclear programme.
Helped by the contraband trade through tunnels from Egypt, Gaza militias have smuggled in longer-range rockets.
But their estimated 35,000 Palestinian fighters are still no match for Israel's F-16 fighter-bombers, Apache helicopter gun ships, Merkava tanks and other modern weapons systems in the hands of a conscript force of 175,000, with 450,000 in reserve.