Palestinian officials say the son of a senior Hamas leader is dead, killed in overnight fighting in Gaza.
Israeli flares lit the night sky, and Hamas officials said they exchanged fire with Israeli soldiers on the ground.
Among the dead included two Israeli soldiers.
By daybreak, injured Palestinians packed the local hospital, where doctors said they were so overwhelmed, they had to treat patients in the hallways.
Israel has been expanding its ground offensive into Gaza, going after tunnels used by Islamic militants to try and sneak into Israel.
Military officials said soldiers have destroyed dozens of tunnels so far.
Gaza officials said 348 Palestinians have been killed and 2,700 have been wounded since the start of fighting nearly two weeks ago.
Dozens of pro-Palestinian protesters flooded Times Square Saturday, calling for Israel to stop the shelling.
"What's happening in Israel is not acceptable," said one protester. "It's not a matter of religion. It's a matter of human rights. We have to show that what Israel is doing to Palestine is wrong. It's not acceptable."
"They're not interested in killing. They're not interested in firing rockets. They just want freedom, and they want to live just like anyone else," said another protester.
"No matter what your reason is, you cannot occupy somebody's country and expect the peace," said a third protester. "You want peace, you have negotiate with an open mind and fairly."
The protesters said too many lives have already been lost.