UPDATE 7-Israel kills Islamic Jihad commander, rockets rain from Gaza

Israel killed a top commander from the Iranian-backed Palestinian militant group Islamic Jihad in a rarely targeted strike in the Gaza Strip on Tuesday, drawing retaliatory rocket salvoes that reached as far as Tel Aviv. In the most serious escalation in months, an Israeli missile attack also hit the home of an Islamic Jihad official in Damascus, Syrian state media said. The strike killed two people including one of the official's sons, the group and Syrian state media said. Israel refused to comment.

As the sound of Palestinian rockets and Israeli airstrikes echoed throughout Gaza and Israeli border areas, Islamic Jihad leader Khaled Al-Batsh spoke at the midday Gaza funeral of his slain fellow militant, Baha Abu Al-Atta. "Israel executed two coordinated attacks, in Syria and in Gaza, in a declaration of war," he said. Mourners fired guns into the air, chanting "revenge!"

Both sides expected further escalation after the funeral, but the extent of it appeared to hinge on whether the much larger Islamist group Hamas would join Islamic Jihad in the exchange of fire that sent civilians on both sides huddling for shelter and forced businesses and schools to close. Israeli Prime Minister Benjamin Netanyahu described Al-Atta as a "ticking bomb" who was responsible for a string of recent cross-border rocket, drone and sniper attacks and was suspected of planning more very soon.

"Israel is not interested in escalation, but we will do everything required to protect ourselves," said Netanyahu, who oversaw Israel's last Gaza war in 2014 but appeared to be urging restraint. "This could take time. What is needed is stamina and cool-headedness." SHOWDOWN WITH IRAN?

By early afternoon Gaza authorities reported four killed, including Al-Atta, 42 and his wife in the predawn Israeli strike that destroyed a floor in their home, scattering debris around their neighborhood. Another airstrike in Gaza hit two men riding a motorcycle, killing one and wounding the other. The Israeli military described them as an Islamic Jihad rocket crew. A third Palestinian man died in another strike.

Gaza medical officials said 24 Palestinians had been wounded, as ambulances streaked through abandoned streets and Israeli missiles landed, many in open fields, apparently targeting hidden rocket silos. Hamas joined Islamic Jihad in condemning Israel, though the two factions have not always been in agreement over strategy. Islamic Jihad, free of the burden of governing Gaza's impoverished two million Palestinians, has at times chafed at Hamas's ceasefire efforts.

Israeli officials said 22 people had been wounded by early afternoon, most of them sustaining light injuries. Among the sites hit by Palestinian rockets were a toy factory in the border town of Sderot and a highway where CCTV footage showed cars and a bus barely escaping the impact. "We decided to take the kids and go to Jerusalem to their grandparents," said Sderot resident Aviram Harish. "There the children can be calm and peaceful."

The Israeli military said it's Iron Dome air defense systems intercepted some of the Palestinian rockets. Israel's banking regulator instructed banks in areas within rocket range to operate under emergency procedures, with essential staff only. The main Tel Aviv share index was down 0.5%. The shekel was 0.2% weaker against the dollar.

Israel casts rising Gaza tensions as part of a regional struggle with arch-foe Iran that has also played out in Syria. Netanyahu, a four-term conservative, has invoked such scenarios in trying to form a broad coalition government with center-left rivals after two inconclusive elections this year. Islamic Jihad said the target of the Damascus attack was the home of a political leader, Akram Al-Ajouri. Israel's Army Radio described Al-Ajouri as head of Islamic Jihad's military wing.

Israel "bears full responsibility for all consequences of this escalation," Hamas said in a statement, pledging that Al-Atta's death "will not go unpunished". At the scene of the Damascus strike, a Reuters journalist said the top floor of a two-story building had been completely scorched. A neighbor said he had been woken up at around 4 a.m. by three explosions that had blown open the doors in his house.

Syrian state media said six people were wounded in the attack, describing the target as a civilian home in Mezuzah, a western district of the capital where several embassies are located. In recent years, Israel has carried out hundreds of strikes in Syria against Iran and the Tehran-backed Lebanese Hezbollah group, which it calls the biggest threat to its borders. 

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