Israel retaliates after Hamas attacks, death toll soars

The news: Israeli air strikes have pounded the Palestinian enclave of Gaza in retaliation for the bloody attacks by Islamist group Hamas on Saturday.

The numbers: The air strikes hit housing blocks, tunnels, a mosque and homes of Hamas officials in Gaza on Sunday, killing more than 400 people. It came a day after Hamas fighters' rampaged through Israel towns, killing about 700 Israelis and abducting dozens more. Key Tel Aviv share indices ended nearly 7% lower, their biggest drop in three years while Israeli government bond prices fell as much as 3%.

The context: The Hamas attacks were the deadliest such incursion since Egypt and Syria's attacks in the Yom Kippur war 50 years ago and have ignited another conflagration in the Israel-Palestine conflict. In southern Israel, Hamas gunmen were still fighting Israeli security forces on Sunday, more than 24 hours after their surprise, multi-pronged assault of rocket barrages and bands of gunmen who overran army bases and invaded border towns. Israel's military, which has deployed tens of thousands of soldiers around Gaza, said it had regained control of most infiltration points along security barriers, killing hundreds of attackers.