Israel slowed the pace of its raids on Gaza Monday and held off a threatened ground incursion as the world intensified efforts to broker a truce around the Palestinian territory.
With Israel's campaign to halt cross-border rocket fire entering its seventh day, Arab ministers were poised to hold an emergency meeting to discuss moves to end the bloodshed.
And Jordan's King Abdullah II warned of the dangers the crisis could pose for the wider region, demanding Israel "stop targeting civilians" as the death toll hit 175.
But as diplomatic efforts gained momentum, the pace of both Israel's raids on Gaza and the militant rocket fire slowed noticeably, with commentators drawing a link with behind-the-scenes ceasefire efforts.
UN chief Ban Ki-moon has urged Israel to scrap plans for a ground offensive, saying "too many" Palestinian civilians have lost their lives.
Human rights groups have said more than 75 percent of the dead were non-combatants.
The UN agency for Palestinian refugees has said more than a quarter of them were children.
But, despite preparations for a possible ground attack, Israel appeared to be holding off with ministers at a Sunday night security cabinet meeting reportedly deciding against putting boots on the ground -- for the time being.
Following a night in which Israel struck 40 targets, the pace of the air strikes appeared to slow noticeably -- and with it the death toll, AFP correspondents reported.
Four people were killed on Monday. A fifth died of injuries from an earlier strike, Gaza emergency services spokesman Ashraf al-Qudra said.
An army spokeswoman said that although 42 rockets had struck Israel during the day, all were short range and there were "far fewer targeted strikes" on the south.
"The military steps being taken by both sides in the last 24 hours were a function, among other things, of the developments in the dialogue," Alex Fishman wrote in the top-selling Yediot Aharonot newspaper, saying the state of negotiations should become clear "in the next 24 hours."
"If no catastrophe takes place that causes a particularly high number of fatalities on either side, the likelihood is that the fire will abate as early as this week."
- 17,000 flee homes -
Over the past 24 hours, more than 17,000 Palestinians, most of them from northern Gaza, have packed into around 20 schools run by the UN agency for Palestinian refugees in a bid to seek some respite from the bombing.
Inside the New Gaza Boys School in Gaza City, every classroom was packed full of people, with blankets strung across doorways to provide some privacy.
"We feel safer here, but the situation is tough, there's very little food and water and nothing for the children to do," said 27-year-old Rehab, from Beit Lahiya.
"We're sleeping on the tiles of the classroom floor."
As the human scale of the tragedy grew, Israel said its campaign has caused "huge" damage to Hamas, with a senior military official saying the army was using a "pain map," hitting targets seen as most valuable to the Islamist movement.
"The harder we hit them, the longer and more difficult the (rehabilitation) process, and more effective the deterrence," he told reporters.
The question now was whether Hamas had taken "enough of a blow to be flexible in negotiations," Fishman wrote.
"If the answer is negative, the ground operation will be the next step."
So far, Hamas does not appear in any mood for concessions, with spokesman Mushir al-Masri telling AFP there would be no flexibility in negotiating a truce.
"Any ceasefire must be based on the conditions we have outlined," he said.
"Nothing less than that will be accepted -- a complete halt to the aggression against the Palestinian people, ending the siege and opening Rafah, as well as the release the prisoners rearrested after they were released in the Shalit deal."
The Rafah border crossing with Egypt is Gaza's only access to the outside world not controlled by Israel.
Israel has re-arrested some 50 prisoners, most of them Hamas members, who had been released as part a 2011 exchange for Israeli soldier Gilad Shilat, held for more than five years by Gaza militants.
- Hamas drone downed -
Earlier, Hamas's armed wing said it had sent "a number of UAVs (drones) deep inside the Zionist enemy entity" in a Hebrew-language posting on Twitter.
The Israeli army confirmed shooting down one drone with a Patriot missile off the port of Ashdod, 28 kilometres (17 miles) north of Gaza. It had no information about any others.
So far, no Israelis have been killed since the operation began on July 8, despite 789 rockets hitting Israel and more then 200 others intercepted.
Late on Sunday, a rocket fired from Syria hit the Israeli-occupied Golan Heights, and several hours later, two rockets fired from southern Lebanon struck northern Israel.
In both cases, there were no casualties but troops fired back at the source of fire, raising fears that the conflict in and around Gaza could spread.
Meanwhile, a Palestinian was shot dead in clashes with soldiers in the southern West Bank, his family said, with the army confirming troops had fired on people throwing stones and molotov cocktails.