More than 100 rockets had been fired into southern Israel during the weekend and the Israeli military countered with nine airstrikes that left five Palestinians dead, the newspaper said.
Haaretz said no deadline had been agreed to for a cease-fire since Egyptian mediators began talking with Israeli and Hamas officials, but that both sides said they would refrain from further attacks as long as the other side did.
Haaretz said three people suffered minor injuries Sunday morning when a rocket hit a factory in Sderot. Other missiles struck the Sha'ar Hanegev Regional Council, where several building were damaged. Rockets continued to fly into Sunday night, with one hitting a house in Sderot. No casualties were reported in that strike.
Israel's Home Front Command ordered schools and learning institutions to shut down due to the rocket attacks. Israeli air force strikes in Gaza targeted weapons manufacturing facilities and rocket launching sites.
At the start of the weekly Cabinet meeting, Prime Minister Binyamin Netanyahu warned Palestinian militants they would face retribution if the attacks go on.
"Terrorist organizations are suffering grave setbacks at the hands of the Israel Defense Forces. The world must understand that Israel will not sit idly. We are ready to escalate our response," Israel Radio quoted Netanyahu as saying.
"This is not North America or western Europe, this is a region where there is no grace for the weak. With open eyes, you must hit when the need arises, and sometimes you are hit, because that is what it is like in the boxing arena. We don't expect our neighbors to disappear, and our neighbors won't become Belgian or Dutch next week," Defense Minister Ehud Barak told Army Radio Sunday morning.
Air raid sirens warned residents in communities surrounding the Gaza Strip, as well as further north in Ashdod, Ashkelon, Gan Yavne, Be'er Tuviya, of the incoming rocket fire. Some of the rockets were intercepted by the Iron Dome missile defense system, the army said.
Hamas, the Islamic Jihad, the Popular Front for the Liberation of Palestine and the Popular Resistance Committee in Gaza all claimed responsibility for the upsurge in violence. Hamas spokesman Fawzi Barhoum warned Israel would pay for its crimes against the Palestinian people, Ynetnews.com said.
The recent round of violence began Saturday evening, after Palestinian militants fired an anti-tank rocket at an Israeli military jeep patrolling near the Gaza border, injuring four soldiers, one seriously, the army said. The army fired artillery shells and executed a number of air strikes.
Israel's chief of staff, Lt. Gen. Benny Gantz, called the incident serious, and on Saturday night conducted a meeting with the military echelon to assess the situation. Netanyahu met with Barak to discuss the situation and later consulted with Gantz concerning Israel's response, the Hebrew language daily Maariv said.