Hamas' armed wing claimed responsibility for the attack on Tel Aviv, the third against the city since Wednesday. It said it had fired an Iranian-designed Fajr-5 at the coastal metropolis, some 70 km (43 miles) north of Gaza.
In the Israeli Mediterranean port of Ashdod, a rocket ripped into several balconies. Police said five people were hurt.
Israel's operation has drawn Western support for what U.S. and European leaders have called Israel's right to self-defence, but there was also a growing number of calls from world leaders to seek an end to the violence.
British Prime Minister David Cameron "expressed concern over the risk of the conflict escalating further and the danger of further civilian casualties on both sides," in a conversation with Israeli Prime Minister Benjamin Netanyahu, a spokesperson for Cameron said.
The United Kingdom was "putting pressure on both sides to de-escalate," the spokesman said, adding that Cameron had urged Netanyahu "to do everything possible to bring the conflict to an end."
Ben Rhodes, a deputy national security adviser to President Barack Obama, said the United States would like to see the conflict resolved through "de-escalation" and diplomacy, but also believes Israel has a right to self-defense.
Egyptian President Mohamed Mursi said in Cairo as his security deputies sought to broker a truce with Hamas leaders, that "there are some indications that there is a possibility of a ceasefire soon, but we do not yet have firm guarantees."
Egypt has mediated previous ceasefire deals between Israel and Hamas, the latest of which unraveled with recent violence.
A Palestinian official told Reuters the truce discussions would continue in Cairo on Sunday, saying "there is hope," but it was too early to say whether the efforts would succeed.
In Jerusalem, an Israeli official declined to comment on the negotiations. Military commanders said Israel was prepared to fight on to achieve a goal of halting rocket fire from Gaza, which has plagued Israeli towns since late 2000, when failed peace talks led to the outbreak of a Palestinian uprising.
Diplomats at the United Nations said Secretary-General Ban Ki-moon is expected to visit Israel and Egypt in the coming week to push for an end to the fighting.
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