"In response to Israel aggression, the Palestinian resistance has launched a large number of rockets in recent hours at the enemy", Hamas said.
The Gaza Health Ministry say pregnant 23-year-old Enas Khammash and her 18-month daughter were killed in Jafarawi in central Gaza. At least eight other civilians in Gaza were also injured, the ministry said.
"As of now, 36 rocket launches were identified from Gaza towards Israel", the army tweeted.
Israeli media said the European Union had prepared a plan for transport in the occupied West Bank which included "the establishment of an airport, a port and a railway to link the Gaza Strip with the West Bank".
The strikes came after two rockets that were launched from the coastal enclave hit the town of Sderot, near Gaza's northern border, police and the army said.
In a written statement, the Ezzeddin Qassam Brigades, the military wing of Hamas, claimed responsibility for the attacks.
Earlier on Wednesday, before the rocket fire, a Hamas official said these negotiations were in "advanced stages".
Prime Minister Benjamin Netanyahu called off a trip to Colombia this week to attend to the Gaza truce talks and was due to meet with security chiefs for late-night consultations.
Israeli aircraft struck 140 targets reportedly belonging to Hamas.
Human rights groups have accused Israeli troops of using excessive force at the protests, but the military said they only opened fire in self-defence or on people trying to infiltrate its territory.
A watchtower of the Qassam Brigades in Al Zaytun neighbourhood was targeted by the Israeli shelling.
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Israel has not commented on the reported casualties in Gaza yet.
The incident occurred while a group of senior Hamas leaders from overseas were visiting Gaza to discuss the ceasefire efforts with local leaders.
The United Nations, he said, has engaged with Egypt in an "unprecedented effort" to avoid serious conflict, but cautioned that "the situation can rapidly deteriorate with devastating consequences for all people".
Rocket warning sirens sounded nearly non-stop in the southern Israeli town of Sderot and other border communities from sunset on Wednesday.
Parts of the town have been closed off and police bomb disposal units were at the scene of the strikes, a spokesman for the force said.
Islamic militant group Hamas has controlled the Gaza Strip since Israel disengaged from the region in 2005.
A Hamas militant was killed in one strike, with at least 12 others injured, the health ministry in Gaza said.
According to Haaretz, an Israeli official source said last week that cease-fire talks would not succeed unless the bodies of slain Israeli soldiers and two Israeli civilians being held captive in Gaza were returned.
Around two million people live in Gaza, mainly stateless descendants of Palestinians who fled or were driven out of what is now Israel at its founding in 1948.
The UN has warned that Gaza would be "unlivable" by 2020 if Israel's decade-old blockade of the Strip continues.