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The aftermath of the bus explosion in Tel Aviv
At least 10 people have been injured in an explosion on a bus in Israel's commercial capital, Tel Aviv.
One Israeli official said the blast, near the military headquarters, was a "terrorist attack".
After the incident, huge blasts were heard in Gaza, in an apparent Israeli strike on the football stadium, while militants fired more rockets at Israel.
International efforts to broker a truce between Hamas and Israel after eight days of exchanges are continuing.
US Secretary of State Hillary Clinton and UN Secretary General Ban Ki-moon are in the region, and are holding talks in the West Bank, Jerusalem and Cairo.
Celebratory gunfireIsraeli Prime Minister Benjamin Netanyahu's spokesman Ofir Gendelman said on his Twitter account that the explosion was caused by a bomb and that it was "terrorist attack".
Emergency services say three of the wounded in the bus explosion are in a serious condition.
End Quote Sami Abu Zuhri Hamas spokesmanHamas blesses the attack in Tel Aviv and sees it as a natural response to the Israeli massacres in Gaza"
The bus was reportedly passing the military headquarters in the city at the time of the blast.
Police believe a bomb was planted on the bus and they are still searching for a suspect.
Israel's Haaretz newspaper said the injured were being taken to Ichilov hospital.
Loudspeaker announcements in Gaza City said that Hamas, the militant Palestinian group that has run Gaza since 2007, had carried out the attack.
Hamas spokesman, Sami Abu Zuhri, told Reuters: "Hamas blesses the attack in Tel Aviv and sees it as a natural response to the Israeli massacres... in Gaza."
Celebratory gunfire reportedly rang out when local radio relayed news of the attack.
BBC correspondents then reported a series of massive explosions in Gaza, in an apparent Israeli strike on the sports stadium.
According to Israel's ministry of foreign affairs, the last bomb attack in Tel Aviv was in April 2006, when a suicide bombing on a restaurant killed 11.
'Profound concern'The bus blast comes on the eighth day of exchanges between Israel and militants in Gaza.
Some 139 Palestinians and five Israelis have been killed.
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Ban Ki-moon: "Now is the time for diplomacy and stopping the violence"
Overnight, Israel's military, the Israel Defense Forces (IDF), said it had attacked more than 100 sites in Gaza "of which approximately 50 were underground rocket launchers".
A key Hamas government compound was reduced to little more than dust and rubble, the BBC's Paul Danahar in Gaza says.
Our correspondent says this was probably the largest attack so far - on a compound that organises Hajj visits, issues passports and licences and houses a Hamas interior ministry office.
Other sites hit in Gaza included a banker's villa, tunnels to Egypt used by smugglers and a media office, said to be linked to Hamas, that was situated two floors above the Agence France-Presse office in Gaza City.
The IDF said 29 rockets had been launched into Israel by militants in Gaza, of which 12 were intercepted by its Iron Dome missile defence system.
The latest violence will further complicate ceasefire discussions taking place in the region.
Mrs Clinton and Mr Ban have been in the West Bank for talks with Palestinian Authority President Mahmoud Abbas.
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Mahmoud Abbas: "We have been working with all concerned parties to halt this aggression"
The pair will later travel to Egypt, where they will meet Egyptian President Mohammed Mursi in the early afternoon local time.
Mr Ban expressed "profound concern" at the civilian casualties in Gaza and also called on militants to end immediately their "indiscriminate attacks on Israeli population centres".
Officials from Hamas had suggested on Tuesday that a truce would come into effect at midnight, but Israel later said it had not agreed to a text.
Israel's demands include no hostile fire of any kind from Gaza and international efforts to prevent Hamas from re-arming, while Hamas is demanding an end to the blockade on Gaza and targeted killings by Israel.
Israel launched its current offensive a week ago with the killing of Hamas military leader Ahmed Jabari. The Israeli government says his assassination, and the subsequent offensive, is designed to end rocket fire from Gaza.
Israel has troops massed along the Gaza border but says it is holding off on a possible ground invasion as talks continue.
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