Twenty-eight Palestinians were killed. Seven were reportedly teenage boys killed after an Israeli tank fired a shell into a crowd. A medic said the explosion "scattered body parts to nearby houses."
Hospital officials say another 130 people were wounded, many seriously -- and many of them women and children.
At least two other Palestinians died today after Israeli helicopters fired a missile on Jebaliya, the largest refugee camp in Gaza. Dore Gold, a Sharon adviser, said the missile targeted militants about to fire a rocket into Israel.
"If the Palestinian Authority has failed to police the territory under its jurisdiction, Israel will do what is necessary to remove the threat of the Qassam rockets to the families of Israel," Gold said.
Nabil Abu Rdeineh, a spokesman for Palestinian President Yasser Arafat, condemned the Israeli operation in a statement from Jebaliya: "The Israeli escalation is continuing and the massacres are continuing as well. We urge the Security Council and the Quartet to intervene and to put pressure on the Israeli Army to stop the aggression and to stop their attacks the civilians and against the Palestinian people."
But Israel is now set to launch a large-scale offensive -- codenamed "Days of Reckoning" -- in northern Gaza.
Analysts say the operation is aimed at countering Sharon's right-wing Israeli critics. They say Sharon's plan to pull Israeli forces and settlers out of Gaza emboldened Palestinian militants to launch bloody attacks in order to give the impression that they are the ones driving out Israel.
Settlers and Jewish residents near Gaza are furious with the government.
Protesters gathered in Sderot, a town near Gaza hit by rocket fire from the militant group Hamas on 29 September. Two children, ages 2 and 4, were killed. Three more Israelis have died in subsequent violence.
Yesterday, Sderot residents marched to a ranch owned by Sharon to protest the pullout. One protester said he feels abandoned by Sharon, a long-time champion of the Jewish settlements.
"We lose children, we lose people here and nobody cares," said the protester. "We feel that Sharon leaves us alone. Sharon doesn't care what happens to us. This is the problem here. After the children are killed, Sharon did not say anything, did not say a word to the people. He doesn't come to say 'I am with you, I will do anything to give you safe[ty], to give you security.' Nothing."
The new military operation, dubbed "open-ended" by cabinet officials, reportedly entails setting up a buffer zone to keep rocket launchers out of range of Israel. It also includes raids into northern Gaza's militant strongholds.
But militants remain defiant.
"We will not surrender, we will resist by Allah's will," Nizar Rayan, a Hamas leader in northern Gaza, said yesterday in Jebaliya. "We will remain on the battlefield, defending our camp."
And a Hamas gunman told Reuters today he sees no end in sight to the cycle of violence, saying: "The formula is clear: blood for blood, bombardment for bombardment."
(compiled from news agency reports)