Israeli ground troops pulled out of northern Gaza before daybreak Monday, following the first extended sweep in an offensive against Palestinian rocket squads that has left more than 100 dead and led the Palestinian president to call off peace talks.

Overnight, Israeli airstrikes targeting weapons manufacturing and storage facilities, a Hamas headquarters and groups of gunmen killed five Palestinians, all of them Hamas militants, Hamas said. But Gaza militants continued launching rockets at southern Israel. Three rockets hit Ashkelon, a city of 120,000, Monday morning, Israeli rescue services said, with one striking an apartment building. No casualties were reported.

Israeli infantry started withdrawing from the town of Jebalya after midnight following several days of fighting, the military said, but the government vowed it would continue its offensive against rocket squads.

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Palestinian medical teams found three more bodies in Jebalya after the Israeli troops left. At least one of them was a militant, they said. Residents trapped in their houses for days began emerging, and some collected equipment left behind by the Israelis: ammunition clips, food cans, two bloody stretchers and a helmet with a bullet hole in it.

Jebalya resident Ahmed Dardouna said he and his nine children had been confined to one room of their house by soldiers who occupied it for three days.

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"We couldn't distinguish day from night," he said. "The sounds of shooting and explosions, mixed with the screaming of soldiers and the screaming of my children who were asking to go to bathroom and for food is still in my ears."

In all, 117 Palestinians have been killed in Gaza since the fighting erupted last Wednesday, according to militants and medical officials. Roughly half the dead were civilians, the officials said. One Israeli civilian was killed by a rocket, and two Israeli soldiers were killed in the Jebalya fighting.

The moderate Palestinian president, Mahmoud Abbas, put peace talks with Israel on hold, clouding an upcoming peace mission by U.S. Secretary of State Condoleezza Rice. The Israeli offensive also drew a chorus of international condemnation, with the EU, Turkey and U.N. chief Ban Ki-Moon accusing Israel of using excessive force in Gaza.

Despite the lopsided death toll, Hamas sent a message to reporters calling the pullout a retreat by the "cowardly" Israeli military. But Israel said the withdrawal didn't signal it was scaling back its Gaza operations.

"Our efforts against the rocket launchers and those who operate them will continue unabated until Israeli children will no longer be attacked while sitting in their own classrooms, and until their families can sit in their own homes without fear of a rocket crashing through their roof," government spokesman David Baker said.

Israeli Defense Minister Ehud Barak said a full-scale invasion was still possible, and Israel might try to bring down the regime of the militant Islamic Hamas. "We will use force to change the situation," Barak said at a meeting late Sunday of security commanders, according to a statement from his office.

In the early hours of Monday, Palestinians counted nine separate Israeli airstrikes all over Gaza, one of them near the office of Hamas Prime Minister Ismail Haniyeh, who was not in the area at the time.

Vice Premier Haim Ramon said Israel should consider returning fire at the rocket launchers, even if it means shelling populated areas. "In the end, this will save lives on both sides," he said, since Palestinian civilians would either force the rocket squads from their neighborhoods or flee themselves. He told Israel Radio early Monday that "no reasonable country" would object to Israeli efforts to defend itself.