The Israeli army on Sunday announced the death of Hadar Goldin, the soldier who went missing in the Gaza Strip two days earlier, with no end to the bloodshed in sight. 

A wounded Palestinian girl arrives at the hospital in Rafah, in the southern Gaza Strip on August 2, 2014 following an Israeli military strike

A special committee led by the army's chief rabbi said Goldin, who held the rank of lieutenant, had been "killed in battle in the Gaza Strip on Friday", according to a statement.

An army spokesman refused to say whether the soldier's remains had been found.

The Israeli side had previously suggested that 23-year-old Goldin had been captured by Hamas fighters in Gaza, sending chances of a more permanent ceasefire nosediving. Such captures are considered by Israel to be casus belli.

Hamas's armed wing, the Ezzedine al-Qassam Brigades, had acknowledged its militants staged an ambush early Friday in which two other Israeli soldiers were killed, but denied holding Goldin.

"We have lost contact with the mujahedeen unit that was in that ambush, and we think that all the fighters in this unit were killed by Zionist shelling along with the soldier, who the enemy says is missing," it said on Saturday.

Both Israel and Hamas vowed Saturday to continue their bloody 26-day confrontation in Gaza, shunning efforts to broker an end to the bloodshed which has claimed more than 1,700 lives.

With no resolution in sight, a senior Palestinian delegation landed in Cairo for talks Sunday on an Egyptian ceasefire initiative, but Israel said it was not sending a negotiating team.

"Hamas has proven that it breaches any agreement reached right away, as happened five times in previous truces," deputy foreign minister Tzahi HaNegbi told AFP.

"It is therefore unclear at this stage what benefit Israel might see for participating in an attempt to reach agreements, based on the Egyptian initiative," he said.

US Middle East envoy Frank Lowenstein was also expected to arrive for talks, along with Hamas and Islamic Jihad.

The Gaza violence has claimed 1,712 Palestinian lives and displaced up to a quarter of the territory's population.

Goldin's death brings the Israeli army death toll to 64 since the start of hostilities on July 8, its heaviest since the 2006 war against the Lebanese Hezbollah.

Earlier Saturday, Israel pulled back troops from two areas in Gaza in what was initially interpreted as a sign it was winding down its biggest military operation there in in decades.

But there appeared to be little further indication Israel was planning to wrap up its operations, with Prime Minister Benjamin Netanyahu promising that Hamas would pay "an insufferable price" for continued cross-border rocket fire.

"We will take as much time as necessary, and will exert as much force as needed," he said at a news conference, adding that troops had also dealt a "significant blow" to Hamas's infrastructure.

Troops would complete their mission to destroy a complex network of tunnels used by militants to infiltrate southern Israel before the next security objectives would be decided, he said, warning that "all options" were on the table.

A spokesman for the Islamist movement mocked Netanyahu's statements as "confused", and as testimony of the "real crisis" he was facing.

"We will continue our resistance till we achieve our goals," Hamas spokesman Fawzi Barhum told AFP.

Israel had said Friday it believed the soldier Goldin had been captured near the southern Gaza city of Rafah. Immediately afterwards, Israel bombarded the Rafah area in shelling that is still ongoing, with medics saying it killed 114 people in 24 hours.

Meanwhile, air strikes and tank fire continued pounding huge areas of southern Gaza into rubble, killing scores more people on Saturday, as militants kept up their cross-border fire, with 56 rockets hitting Israel and another six downed, including two over greater Tel Aviv.