Israeli soldiers battle Hamas fighters for 2nd day as Lebanon's Hezbollah fires rockets over border

The latest:

Israeli soldiers fought to repel Hamas militants Sunday and exchanged fire with the Lebanese militant group Hezbollah, raising the prospect of a broader regional conflict, a day after an unprecedented surprise attack on southern Israel by Palestinian militants.

There was still some fighting underway more than 24 hours after an unprecedented surprise attack from Gaza, in which Hamas fighters, backed by a volley of thousands of rockets, broke through Israel's security barrier and rampaged through nearby communities.

At least 600 people have reportedly been killed in Israel since the launch of the attack. More than 300 have been killed in Gaza as Israel responded with airstrikes.

The militants also took captives, including women and children, back into the coastal Gaza enclave. "What we have in our hands will release all our prisoners," Saleh al-Arouri, deputy chief of the Hamas political bureau, told Al-Jazeera TV on Saturday.

While Israel's retaliation strikes levelled buildings in Gaza and Prime Minister Benjamin Netanyahu said the country was "at war."

Fears of conflict spreading to other fronts escalated Sunday morning after Lebanon-based Hezbollah claimed responsibility for strikes on Israeli positions in a disputed area along the border with Syria's Golan Heights. 

Israel's military responded with armed drone strikes on Hezbollah targets in a disputed area where the borders of Israel, Lebanon and Syria meet.

The flareup on Israel's northern border threatened to draw into the battle a fierce enemy of Israel's that is backed by Iran and estimated to have tens of thousands of rockets at its disposal.

Rear Adm. Daniel Hagari, an Israeli military official, told reporters the situation at the northern border was calm after the exchange.

But he said fighting was still underway in the south and that there were still hostage situations there.

He said troops had moved into every community near the Gaza frontier, where they planned to evacuate all civilians and scour the area for any remaining militants.

"We will go through every community until we kill every terrorist that is in Israeli territory," he said. In Gaza, "every terrorist located in a house, all the commanders in houses, will be hit by Israeli fire. That will continue escalating in the coming hours."

Hamas gunmen rolled into as many as 22 locations outside the Gaza Strip early Saturday morning, including towns and other communities as far as 24 kilometres from the Gaza border and took hostages as Israel's military scrambled to muster a response, while the militant group launched thousands of rockets at Israeli cities.