Shopkeepers say they were sitting outside their shuttered businesses, catching a break from being cooped up during wartime, when an Israeli missile struck a nearby mosque, killing a truck driver and wounding 45 people.
One of those wounded by shrapnel said from his hospital gurney that the strike came without warning.
Israel has defended such strikes on civilian sites - nearly 500 homes, 16 mosques and at least two hospitals, by Palestinian count - by saying that Hamas hides weapons and fighters there or that tunnels into Israel originate in such places.
Israel says it is defending its civilians against rocket fire and other attacks from Gaza and doing its utmost to minimise harm to Palestinian civilians.
However, three-fourths of the Palestinians killed in more than two weeks of Israel-Hamas fighting were civilians, according to UN figures. One in four was a minor, it said.
A Palestinian health official put the death toll at 695 and said more than 4,100 were wounded, with civilian casualties rising sharply since Israel sent tanks and troops into Gaza last week in its first ground operation in five years.
Israel has not offered its own count, but Lieutenant Colonel Peter Lerner, a military spokesman, said 210 Gaza militants were killed since the ground operation began.
The heavy civilian death toll leaves Israel increasingly vulnerable to accusations that it is using excessive force and possibly committing war crimes - though in Israel, most of the discourse has focused on the rocket attacks.
While most of the rockets have been intercepted and the damage caused has not been great, the furor over them has been powerful among Israelis.
Only in recent days has public opinion started to focus more closely on the devastation in Gaza and the question of disproportionality in Israel's actions.
Navi Pillay, the UN high commissioner for human rights, said Wednesday that some of the recent Israeli attacks, including those on homes and on a care center for the disabled, raise "a strong possibility that international law has been violated in a manner that could amount to war crimes."
She also condemned indiscriminate Hamas attacks on Israeli civilians - including some 3,000 rockets fired since July 8 that have killed three Israeli civilians - and said storing military equipment in civilian areas or launching attacks from there is unacceptable.
But, she said, "the actions of one party do not absolve the other party of the need to respect its obligations under international law."
The UN Human Rights Council has voted to establish an independent commission to investigate possible violations of international law during the fighting.
Israel has said the goal of its Gaza operation is to hit Hamas targets, weaken the Islamic militant group's ability to fire rockets, and destroy Hamas tunnels leading into Israel.
The military said it had carried out about 3,250 strikes against "terrorist locations," including what it described as Hamas command centers, tunnels and rocket launching sites.
However, in most cases, the army does not explain why a certain location is being hit, particularly when asked about strikes on private homes in which several members of the same family are killed, an increasing common occurrence in recent days.
The Palestinian human rights group Mezan said that 477 homes have been destroyed in targeted hits since July 8, and that 332 people died in their homes as a result of military operations.
Palestinian officials reported an airstrike on the Shamea Mosque in Gaza City and said Red Crescent cars and a Red Cross convoy came under heavy fire when they entered a small Gaza town near the border with Israel to evacuate the dead and wounded.
In another incident, witnessed by journalists, Red Cross staff and members of the Palestinian civil defence came under fire as they approached the Israeli front line in an attempt to remove casualties from the Gaza City neighbourhood of Shijaiyah.
The airstrike on the Shamea Mosque came just before noon. One man was killed, identified by police as 25-year-old truck driver Nidal al-Ijla. Forty-five people were wounded, said Palestinian health official Ashraf al-Kidra.
Hussam Odeh, a clothing shop owner who was hit in the face by shrapnel, said he and other merchants were sitting outside when a large explosion went off. No warning was given, said Odeh, 27, and a cousin, as they were patched up in a hospital emergency room.
Lerner, the military spokesman, would not say why the mosque was hit.
UNDER FIRE: The Israeli community Netiv Haasara is lit up by army flares fired in Gaza.
As the battle for international public opinion intensifies, the military has published more material it says shows the militants use civilian sites for cover - including videos purporting to show missiles launched from urban areas and secondary explosions in neighbouring buildings that suggest there were explosives stored there.
It also released drone footage showing two black-clad figures, presumably fighters, getting into an ambulance and issued maps of purported rocket launching sites close to homes and a hospital.
Israel says militants had stored rockets near the Al Aqsa Hospital in central Gaza where four people were killed and about 30 wounded by Israeli tank fire earlier this week.
The army also portrayed the Al Wafa Hospital in the Shijaiyah neighbourhood, hard-hit in several days of fighting, as a Hamas military compound. Several access shafts led from the hospital to the Hamas tunnel network, it said.
The hospital was repeatedly hit by Israeli tank shells, and after initially refusing, the director agreed to evacuate 17 patients.
Israeli officials have also alleged that Hamas prevents Gaza civilians from fleeing their homes when they receive warnings to clear an area ahead of Israeli strikes.
In the early days of the fighting, before Israel's ground offensive, Hamas authorities issued statements urging residents to stay and dismissing Israeli warnings as "psychological warfare."
However, displaced Gaza residents describing their ordeal have said consistently that they fled in haste, with few belongings, and made no mention of attempts by Hamas to keep them in their homes.
Nahed Sirsawi, 30, a displaced resident of Shijaiyah, said her husband had received a call from the Israeli army late last week, telling him the family had five minutes to leave the house before bombing would begin.
The call set in motion a terrifying odyssey, with the family of seven seeking refuge in a series of homes of relatives, only to be exposed to more tank shelling or told again by the army to evacuate.
Eventually, the Sirsawis found refuge in the St Porphyrios Church in Gaza City along with dozens of others from their area. Yet even the church wasn't safe, she said. This week, several missiles hit a nearby cemetery, sending debris flying into the church courtyard.
"I don't feel safe anywhere," she said, pointing to where shrapnel hit inside the church library where her family was sleeping.
Israel said that it can't be held hostage by Hamas' decision to fire from within densely populated areas, and that it has an obligation to defend Israeli civilians. Government spokesman Mark Regev said Israel's response is "both measured and proportionate."
But even in Israel, some - still a fringe - are questioning this.
In a letter to Israel's defence minister, a number of local aid oragnisations demanded Israel ensure the humanitarian needs of the civilian population, especially water and electricity. A few celebrities have spoken out against the airstrikes, then faced a flood of criticism for doing so.
News shows are still dominated by calls to let the army "complete its job." The attitude derives from a widespread sense in Israel that Hamas is evil incarnate and that the militants actually want civilians to be killed for the propaganda value.
Gideon Levy, a prominent leftist Israeli columnist, said a longstanding "dehumanisation of the Palestinians" has resulted today in a "total lack of any kind of empathy" with them.
One concern in Israel is the effect the rising civilian casualty count will have on international public opinion.
Numerous Israeli campaigns ground to a halt amid world pressure over civilian casualties on the Arab side. That included the previous two rounds with Hamas in recent years and operations against Hezbollah militants in Lebanon in 1996 and 2006 - all of which ended amid the same kind of global condemnation being heard this week.