Israel pulled back most of its troops in the Gaza Strip closer to the Israeli border and withdrew some units from the territory, redeploying its forces in what it said would be an ongoing offensive against Hamas.
Despite the draw-down of ground forces, air strikes continued and the UN said nine Palestinians were killed and 27 injured in a missile strike outside one of its schools housing thousands of war refugees in the town of Rafah in the southern Gaza Strip. Local health officials said 10 were killed.
The incident was the second deadly strike on a UN shelter in a week, and it drew a sharp condemnation from UN Secretary General Ban ki-Moon, who called it "a moral outrage and a criminal act."
The State Department also issued an unusually harsh response.
"The United States is appalled by today's disgraceful shelling outside an UNRWA school in Rafah sheltering some 3,000 displaced persons, in which ten more Palestinian civilians were tragically killed," said the statement from State Department spokesperson Jen Psaki. "We once again stress that Israel must do more to meet its own standards and avoid civilian casualties."
"UN facilities, especially those sheltering civilians, must be protected, and must not be used as bases from which to launch attacks," Psaki added. "The suspicion that militants are operating nearby does not justify strikes that put at risk the lives of so many innocent civilians."
The statement called for a "full and prompt investigation" of the incident and other recent shellings of UN schools.
The Israeli army said it had targeted three Islamic Jihad militants on a motorcycle near the school, and was "reviewing the consequences of the strike."
Israeli officials said the pullback of ground troops was ordered as the army neared completion of its mission to uncover and destroy networks of Hamas tunnels in Gaza, some dug across the border to Israel.
But the redeployment also appeared driven by a desire to cut Israeli losses in ground fighting, which has claimed the lives of 64 soldiers, a far higher toll than in the last Israeli ground offensive in Gaza in 2009.
"We're down-scaling while remaining present on the ground," said Lt. Col. Peter Lerner, a military spokesman, adding that the nearly month-long Israeli campaign against the militant Islamist group Hamas was continuing.
More than 1800 Palestinians, mostly civilians, have been killed in Israeli bombardments and shelling since the start of the offensive on July 8, according to the Gaza Health Ministry. Three civilians have been killed by rocket strikes in Israel.
Lerner would not elaborate on how many troops had been withdrawn from the Gaza Strip, but Israeli media said that significant infantry and armored forces had left the territory, but remained stationed nearby.
Israeli forces on the ground continued to operate in some Gaza areas, wrapping up operations to destroy the Hamas tunnel networks, Lerner said.
Prime Minister Benjamin Netanyahu said on Saturday that after completing the destruction of the tunnels, the army would deploy "in places convenient for us" in order to reduce "friction," suggesting a pullback from forward positions in built-up areas.
On Saturday the army notified Palestinians living in the northern Gaza Strip town of Beit Lahiya that it had completed operations there and that they could return to their homes, although many houses in the town were destroyed or damaged by Israeli shelling and bombardments.
Fresh Israeli strikes were reported Sunday in the southern town of Rafah, where the Gaza health ministry said 10 people were killed and at least 30 wounded when a missile landed near the UN school sheltering hundreds of families who had fled fighting in the area. In another strike, 10 members of the al-Ghoul family were killed when their house was hit, according to local reports.
The Rafah school, run by the by the United Nations Relief and Works Agency for Palestinian refugees, was housing about 3,000 Palestinians who had left their homes, said Adnan Abu Hasna, an agency spokesman in Gaza. He said the air strike outside the gate of the school caused "multiple deaths and injuries inside and outside the school."
Inside the school compound after the blast, several bodies, among them children, were strewn across the ground in puddles of blood, the Associated Press reported.
An UNRWA statement said that the agency had given the Israeli army the location of the school and notified it on 33 separate occasions, most recently an hour before the strike, that it was housing displaced people.
The UN says some 260,000 Palestinians have taken refuge in its schools since the start of the fighting, with an estimated total of 475,000 people displaced throughout the Gaza Strip, amounting to one quarter of the territory's population.
With the borders of the Gaza Strip sealed and Israel striking across the coastal enclave, Palestinians who were ordered by the Israeli army to leave their homes for their own safety say nowhere is secure.
Last Wednesday, at least 15 Palestinians sheltering in an UNRWA school were killed when Israeli shells struck the compound. The army said it was responding to mortar rounds fired by militants in the vicinity of the school.
At least six UN schools have been shelled since the start of the current conflict in Gaza, and in some cases the army said it was returning fire after being attacked by militants firing from near the facilities.
With the war in its fourth week, UNRWA and the World Health Organization warned of an unfolding "health disaster" in the Gaza Strip, saying that Gaza medical facilities were "on the verge of collapse." They said critical medical supplies at hospitals were almost depleted, damage to power supply had left the hospitals dependent on unreliable backup generators, and inadequate water and sanitation created risks of outbreaks of diseases.
"Hundreds of thousands of people are sheltering in terrible conditions," said Robert Turner, the UNRWA director of operations in Gaza. "We are now looking at a health and humanitarian disaster. The fighting must stop immediately."
Representatives of Palestinian factions, including Hamas and the mainstream Fatah movement, met in Cairo on Sunday with Egyptian officials to discuss ceasefire terms. Israel is not attending the talks, saying that after the collapse of a temporary ceasefire with Hamas on Friday, it would act unilaterally to protect its security. However Israeli officials were reported to be in contact with their Egyptian counterparts to follow the talks