GAZA CITY (AFP) - Israeli strikes set UN and media buildings and a hospital ablaze Thursday as tanks rolled deep into Gaza City while diplomats struggled to halt the war that has killed nearly 1,100 people. Hundreds of terrified civilians, many gripping wailing children, fled the advancing Israeli troops inside Gaza's main city as warplanes pounded the impoverished Hamas-ruled enclave in a bid to stem Palestinian rocket fire. Despite the fierce offensive, Hamas activists continued to launch projectiles Thursday, sending two long-range Grad missiles crashing into the southern Israeli city of Beersheva and wounding five people, medics said. A total of 25 rockets and mortar rounds were fired from Hamas into Israel on Thursday, with Palestinian activists having launched at least 1,090 projectiles since the war began, according to the army. While battles raged on the ground, Egypt kept up Western-backed efforts to end the war in which an estimated 600 Palestinian civilians have been killed. Shortly after UN chief Ban Ki-moon arrived in Israel, Israeli troops shelled the main UN compound in Gaza, wounding three employees, setting fire to a warehouse filled with tonnes of aid and leading the UNRWA agency to partly suspend operations. An UNRWA spokesman said tens of millions of dollars worth of humanitarian aid had been destroyed in the blaze. UNRWA Director John Ging told CNN that the situation at the compound was "very serious." He claimed an artillery shell was fired into the compound while a phosphorous shell landed in the area of the warehouse and the workshop. Another humanitarian group, CARE International, said it too had been forced to suspend all deliveries of food and medical supplies due to heavy bombardment in and around its warehouses and distribution sites in Gaza City. Ban said he had conveyed his "strong protest and outrage" and demanded an explanation in talks with Israeli officials as part of a regional truce tour. Israeli Prime Minister Ehud Olmert said that Israeli troops had shelled the compound in Gaza in response to fire coming from the building. "We do not want such incidents to take place and I am sorry for it but I don't know if you know, but Hamas fired from the UNRWA site," Olmert's office quoted him as telling Ban. UNRWA spokesman Chris Gunness denied the claim. "There were no activists or activity in our compound," he said. Israeli Foreign Minister Tzipi Livni insisted the Jewish state would decide how and when to end its campaign. In southwestern Gaza, an Israeli strike hit the Al-Quds Hospital in the Tal Al-Hawa neighbourhood, where dozens of Israeli tanks rumbled into the streets after dawn, sparking fierce clashes with Palestinian gunmen. About 500 people including patients were huddled at Al-Quds hospital that suffered a "direct hit" in an Israeli air strike, the International Red Cross said, condemning the incident as unacceptable. An Israeli raid also hit a building housing several media outlets in central Gaza City, wounding two cameramen. Israeli troops killed one of Hamas' top leaders in Gaza, Interior Minister Said Siam, the most senior Islamist to have been killed in the 20-day-old war in the enclave, Hamas television said. "Leader Said Siam, his son and his brother fell as martyrs in Gaza," reported Al-Quds television, a Hamas station based in Beirut. A Hamas website confirmed the report. The three died in an Israeli air strike on the house of Siam's brother north of Gaza City. The Ezzedine Al-Qassam Brigades, Hamas' armed wing, vowed to avenge the killing of Siam. "His blood will not have been shed in vain," the group said in a statement. "We will respond with actions, not words." In all, at least 43 people were killed in Gaza on Thursday, medics said, but the exact number of casualties was likely to be much higher as the ongoing clashes blocked ambulances from reaching the wounded. Since Israel unleashed its Operation Cast Lead on December 27, at least 1,097 people have been killed and at least another 5,000 wounded, according to Gaza medics. Among the dead are at least 355 children and 100 women. Israel says 10 Israeli soldiers and three civilians have died as a result of combat or rocket fire in the same period. And the Western-backed Palestinian President Mahmud Abbas, who has been pressing for a ceasefire in the territory his forces were ousted from in June 2007, said Thursday evening that the next few hours would be "decisive."