The enclave was quiet following days of Egyptian-brokered mediation to stem violence which has killed at least 1,940 Palestinians and 67 on the Israeli side since July 8.
Egyptian intelligence mediators in Cairo threw themselves back into shuttle diplomacy that unraveled after a 72-hour truce expired Friday.
With no reports of violations on either side since midnight on Sunday, shops and businesses started to reopen and people ventured onto the streets of the war-torn coastal region, which is home to 1.8 million Palestinians.
Outside a UN-run school, a clutch of cars and donkey carts waited to take some refugees back to homes they had fled during the month of fighting.
“We want to go back to see what happened to our house,” said Hikmat Atta, 58, who piled his family into a small cart to visit their home in the northern town of Beit Lahiya.
But, with the second truce in a week still in its early stages, he was not taking any chances.
“We’re just going back for the day, at night we’ll come back here,” he told AFP.
Palestinian emergency services said that a one-month-old baby girl died on Monday of injuries sustained during the fighting, raising the overall death toll in Gaza to 1,940.
Shuttle diplomacy
In Cairo, Egyptian intelligence mediators were locked in talks with the Palestinian delegation.
They were to relay Palestinian demands to Israeli negotiators, who returned to Egypt three days after quitting when rocket attacks resumed on southern Israel as the first 72-hour truce expired.
Egypt has urged the warring sides to use the new lull to reach “a comprehensive and permanent ceasefire,” after efforts to extend a similar truce last week collapsed into a firestorm of violence.
Israel insists that the security of millions of its citizens subject to constant fear from Palestinian rocket attacks be guaranteed.
Hamas, the de facto power in Gaza, has conditioned its acceptance of any permanent agreement on Israel lifting its crippling eight-year blockade on the enclave.
“In the case of Israeli procrastination or continued aggression, Hamas is ready with other Palestinian factions to resist on the ground and politically,” its exiled leader Khaled Meshaal told AFP in Doha.
Israeli Intelligence Minister Yuval Steinitz warned that without a reasonable outcome to the talks, his country would have to consider sending ground troops back into Gaza.
“Either there will be a reasonable resolution of the situation in Gaza, or, if the fire resumes, we will have to consider a broadening of the operation, including an expansion on the ground, overthrowing the Hamas authorities and the demilitarization of Gaza by ourselves,” Steinitz told army radio.
“No-one is very excited by this and there is a price for it. But I think that within a couple of days, it will be decided one way or another.”
Finance Minister Yair Lapid said the Israeli operation should lead to a “diplomatic” overture in the form of an international conference attended by Israel, Palestine, Egypt, the United States, the European Union, and “moderate Arab countries like Saudi Arabia.”
Gaza reconstruction
James Rawley, the top UN humanitarian official for the Palestinian territories, said Israel’s security concerns must be addressed but warned that without ending the blockade another conflict was likely.
“Not only will we see very little in the way of reconstruction, but I am afraid that the conditions are in place for us to have another round of violence,” he told AFP.
Palestinian delegates in Cairo said they would be happy for president Mahmoud Abbas’s Palestinian Authority to take over the reconstruction of Gaza and execute any agreement reached in Cairo.
Israel has no direct dealings with Hamas.
Hamas had refused to extend the last 72-hour lull when it expired on Friday, and Israel accused the Islamist faction of breaching the agreement in its final hours with mortar attacks.
The UN says just under three quarters of those killed in Gaza were civilians. Around a third of the civilian victims were children.
The Humanitarian Relief Foundation, a Turkish aid group, said it would send a new flotilla of ships in a bid to break Israel’s eight-year blockade on Gaza.
Four years ago, the group sent a six-ship flotilla to Gaza which was stormed by Israeli commandos, leaving 10 Turkish nationals dead and triggering a major diplomatic crisis with Ankara.