JERUSALEM: At least 17 people have been killed and more than 200 wounded in an Israeli airstrike on a market, shortly after Israel said it was observing a four-hour humanitarian ceasefire.

Medical officials said the strike hit a busy market in the Shejaiza neighbourhood between Gaza City and the Israeli border. The dead included a Palestinian journalist covering the conflict. The latest attack brings the total Palestinian death toll to more than 1,300.

On the Israeli side, 56 soldiers and three civilians have died since the start of the offensive on July 8. That includes three soldiers who were reportedly killed when a wall collapsed on them as they were taking part in a ground operation in Gaza earlier on Wednesday.

Israel had said it would halt assaults in areas of Gaza where troops were not "currently operating" until 7pm local time (5pm UK time). Hamas denounced the truce as a publicity stunt in the wake of a deadly attack on a UN-run school, and continued firing rockets into Israel.

The school in Jebalya refugee camp, where some 3,000 Palestinians were sheltering, was hit around dawn. At least 19 people, including children, were killed, many of them as they slept.

The UN Relief and Works Agency (UNRWA) said it told Israel "17 times" the building was being used by refugees, although it also confirmed other schools had been used to store weapons. The UNRWA chief Pierre Krahenbuhl said the attack violated international law.

UN Secretary General Ban Ki-Moon said it was “unjustifiable, and demands accountability and justice.” The United States, meanwhile, offered its sharpest criticism of the conflict yet, saying it was “extremely concerned” that Palestinians seeking refuge in shelters were not safe, although it did not specify who was responsible.

Jebalya was the second UN-run school to be hit in the past week, with a complex in Beit Hanoun  struck last Thursday , killing at least 15 people. An Israeli defence spokesman said militants near the school fired mortars at soldiers before the attack.

On the 23rd day of the conflict, Israeli TV said progress was being made to achieve a peace deal. An Israeli delegation has now arrived in Egypt for discussions.

Israel says its ongoing operation is meant to stop Hamas rocket fire and demolish a sophisticated network of tunnels. More than 2,600 missiles have been fired from Gaza in the past three weeks, the Israeli army said.

Meanwhile, the leader of Hamas’ military wing, Mohammed Deif, issued a rare statement, saying there will be no end to the fighting until the blockade of Gaza is lifted.