The conflict in Gaza rages on with Israeli forces engaging Palestinian fighters with Gaza City having been surrounded by Israeli troops.

Israel commenced Operation Cast Lead on December 27 and escalated the conflict late Saturday with its ground invasion of the territory.

Israeli troops clashed with Hamas fighters and fierce battles began in four spots in the north, around Gaza City, Beit Hanun, Beit Lahiya and Jabaliya.

The Hamas radio station was targeted along with mosques and Palestinian fuel supplies.

The Hamas movement responded by warning Israel against the attacks, saying that "We have prepared the statement of victory".

Gaza resistance fighters retaliated by firing ten more rockets into Israeli cities despite intensified air and ground strikes on the coastal strip.

According to a Press TV correspondent in Gaza, two of the rockets were fired into western Negev and three hit Sderot city.

The Israeli radio confirmed the Sderot attack, saying one person was wounded in the incident.

The latest developments bring the number of Palestinians -- the natives of the land -- killed to over 492 with 2750 others wounded; Israeli casualties have risen to 39.

The Israeli army has confirmed that at least 30 of its soldiers have been wounded in action, some of whom are now in critical condition.

The Palestinian Hamas says it has captured two Israeli soldiers since the ground incursion began.

Israeli tanks and troops swept across the border into Gaza on Saturday night, opening a ground war in the territory after Israeli aircraft pounded the impoverished strip for over a week.

While Israel says the operation is aimed at stopping rocket attacks on its communities, Hamas asserts that its attacks are carried out in retaliation for the Israeli pressure and blockade imposed on the strip -- home to 1.5 million Palestinians.

Hamas began launching rocket attacks against Israel after Tel Aviv violated a six-month ceasefire with the Palestinian movement.

Despite world condemnation, the United States has once again blocked a UN Security Council resolution that would have demanded an end to the Israeli aggression.

In the latest development, Israeli tanks and artillery have reportedly claimed the lives of at least 12 Palestinians -- mostly civilians -- in the northern areas of the Gaza Strip.

Based on reports, four of the victims are members of a single family and were killed when a shell hit their home.