The Gaza situation "is on a knife-edge", UN Secretary General Ban Ki-moon has said.
The UN chief has urged Israel and Palestinian militants to end hostilities, reports BBC.
The region "cannot afford another full-blown war", he made the comment after Israel said Hamas had fired dozens of rockets at Israeli cities on Wednesday night, following Israeli air strikes in Gaza.
"The deteriorating situation is leading to a downward spiral which could quickly get out of control," Ban said, adding: "The risk of violence expanding further still is real."
He demanded that Hamas militants stop firing rockets and also urged the Israeli government to exercise restraint and respect international obligations to protect civilians.
The UN Security Council is due to meet for emergency talks on the crisis later on Thursday.
More than 60 Palestinians are reported to have died since Tuesday in Israeli air strikes against militants and half of the casualties were civilians, including women and children, Gaza medical officials say.
The Palestinian health ministry said eight Palestinians were killed in an air raid on two houses near the southern city of Khan Younis early on Thursday.
Israeli PM Benjamin Netanyahu earlier vowed to "further intensify attacks on Hamas" in Gaza, saying the militants would "pay a heavy price" for their rocket attacks.
"This operation could take time. We are resolved to defend our families and our homes," Netanyahu said.
Israel says its targets have been militant fighters and facilities including rocket launchers, weapons stores, tunnels and command centres.
