Israel’s defence minister has ordered a “complete siege” on the Gaza Strip following an unprecedented incursion into Israel by Hamas fighters.

Israel formally declared war on Sunday and gave the greenlight for “significant military steps” to retaliate against Hamas for Saturday’s surprise attack. More than 1,100 people have been killed and thousands wounded on both sides.

The defence minister’s announcement on Monday came as Israel’s military scoured the country’s south for Hamas fighters and guarded breaches in its border fence with tanks while pounding Gaza from the air.

A spokesperson said the Israeli military regained control of border communities taken by Hamas fighters during the attack. But Palestinian militants continued firing barrages of rockets, setting off air raid sirens in Jerusalem and Tel Aviv.

Dozens of students held a rally in support of the Palestinian people on Monday at the prestigious American University in Egypt’s capital. The students rallied across the university campus in Cairo’s upscale 5th Settlement neighbourhood. Students were seen waving Palestinian flags and holding banners with slogans such as “Free Palestine.”

The rally came as fighting raged for a third day between Israel and Palestinian militant groups following Hamas’ unprecedented Saturday attack on southern Israel.

The UN Palestinian refugee agency, UNRWA, says it is near maximum capacity in accommodating internally displaced people in Gaza. The agency’s director of external communications, Tamara Alrifai, said on Monday that nearly 137,000 people have sheltered so far in over 70 UN schools around Gaza. Alrifai said the agency can host up to 150,000 people at up to 79 schools around the territory.

She added there is fuel in Gaza that could last for up to 10 days. Families in several border towns in southern Lebanon have started fleeing north as Israeli shelling continues in the area.

An Associated Press team saw several cars packed with people and belongings departing Monday. “We tried to flee Ait el-Shaab to Rmeish, but they told us everyone has to stay in their area,” a man said as he and his family tried to flee.

Israeli shelling intensified after four militants crossed over the border and clashed with Israeli Defence Forces troops on Monday. Several rockets were fired from near the Lebanese border earlier. A Hezbollah spokesperson denied the militant group’s involvement in the operation.

The night was a getaway. Thousands of young men and women gathered at a vast field in southern Israel near the Gaza border to dance without a care. Old and new friends jumped up and down, revelling the swirl of the bass-heavy beats.

Maya Alper was standing toward the back of the bar with teams of environmentally conscious volunteers, picking up trash and passing out free vodka shots to party-goers who reused their cups. Just after 6am, as a light-blue dawn broke and the headliner DJ took the stage, air raid sirens cut through the ethereal trap music. Rockets streaked overhead.

Alper, 25, jumped into her car and raced to the main road. But at the intersection she encountered crowds of stricken festival attendees, shouting at drivers to turn around. Then, a noise. Firecrackers? Panicked men and women staggering down the road just in front of her fell to the ground in pools of blood. Gunshots.

European Union Commissioner Oliver Varhelyi said on Monday the bloc is suspending “all payments immediately” to the Palestinians because of what he called the “scale of terror and brutality” during the attacks of Hamas against Israel.

The surprise announcement by Varhelyi came just hours after EU officials stressed that no EU money whatsoever was going to Hamas in the first place and that contacts had been frozen for 16 years. The EU considers Hamas a terror group.

The US State Department said on Monday that at least nine American citizens have been killed in the weekend Hamas attacks on Israel, raising the toll from four. The State Department says an undetermined number of American citizens remain missing and unaccounted for. It is not clear whether the missing had been taken hostage, were killed or are in hiding.

The State Department is in touch with families “and providing all appropriate consular assistance,” spokesman Matthew Miller said.

Major airlines have suspended flights to Israel after the nation declared war following a massive attack by Hamas. American Airlines, United Airlines and Delta Air Lines suspended service as the U.S. State Department issued travel advisories for the region citing potential for terrorism and civil unrest.

Egypt has engaged in negotiations with Israel and Palestinian militant groups to release Palestinian women in Israel’s prisons in exchange for Israeli women captured by Hamas militants, the state-owned Egyptian newspaper Al-Ahram reported on Monday.

The daily paper quoted an unnamed source as saying that the negotiations were aimed at finalizing an agreement on the trade.

“The Egyptian government is presently awaiting responses from both parties regarding the proposed prisoners exchange and a temporary cease-fire,” Al-Ahram said.

Palestinian militant groups have claimed to be holding over 130 people who were captured in Israel in the past two days. Hamas spokesman Abdel-Latif al-Qanoua told The Associated Press by phone that the group’s fighters had captured more Israelis as recently as Monday morning.

He said the group aims to free all Palestinian prisoners held by Israel, which in the past has agreed to lopsided exchanges.

Lebanese caretaker Prime Minister Najib Mikati said on Monday that the tiny country’s priority is to maintain stability along its southern border with Israel following an exchange of attacks between Israeli troops and Hezbollah militants over the weekend.

Hezbollah claimed responsibility for firing rockets at three Israeli positions in a disputed territory along the border of the Israeli-occupied Syrian Golan Heights, before Israel returned fire.

Mikati called on the international community to “take responsibility” in pressuring Israel to return to peace talks under the Arab Peace Initiative. “Anything other than that is a further spiralling of violence that will not benefit anyone,” he said.

Iran-backed Hezbollah has praised key ally Hamas for its unprecedented incursion into Israel but not said if it would attempt to join forces. Israel has estimated that Hezbollah has some 150,000 rockets and missiles aimed at the country.

The Kremlin is “extremely concerned” by the “spiral of violence” in Israel, spokesman Dmitry Peskov told reporters on Monday.

“We believe that this situation needs to be put onto a peaceful track as soon as possible. And the continuation of such a spiral of violence, of course, is fraught with further escalation and expansion of this conflict. This is a great danger for the region, so we are extremely concerned,” Peskov said.

The Kremlin spokesman added that Russian authorities were not aware of any Russian nationals injured in the conflict.

Ukrainian President Volodymyr Zelenskyy has drawn a parallel between Russia’s invasion of his country and the Hamas militant group’s incursion into Israel, saying only “rules [and] international law” can ensure peace around the world.

“The same evil, and the only difference is that there is a terrorist organization that attacked Israel, and here is a terrorist state that attacked Ukraine,” Zelenskyy said in a video address Monday to a NATO parliamentary assembly in Copenhagen.

“Our unity must and can stop the evil,” Zelenskyy said. “Let everyone who sponsors terror feel the power of our wrath. And let everyone who needs help defending themselves against terror feel the power of our solidarity.”

• An AP report