The heaviest fighting of Israel's war on Hamas raged in Gaza City early on Tuesday as Israeli Prime Minister Ehud Olmert rebuffed appeals to stop the death toll from mounting further.

French President Nicolas Sarkozy led new calls to halt the conflict, which doctors say has killed at least 560 Palestinians, but Olmert and other top officials said the offensive to halt militant rocket attacks will continue.

With Israeli helicopters firing heavy machine guns from above, tanks shelled the dense Shejaiya district of eastern Gaza City, residents said.

Flares lit the night sky over a city without electricity as blasts shook the area.

Amid the chaos, the Israeli army said three of its soldiers died and 24 were wounded when their position was accidentally hit by tank fire in northern Gaza.

Hamas said it fired missiles at seven tanks in Shejaiya and killed 10 Israeli soldiers. An army spokesman dismissed the claim as "just a rumour."

At least 13 children were among 60 bodies taken to Gaza hospitals on Monday, medics said. Almost 100 children have been killed since the Israeli air raids began on December 27, according to emergency services.

More than 2,700 people have been wounded , and the International Red Cross said people were dying because ambulances could not reach them.

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