Israeli Prime Minister Benjamin Netanyahu threatened to hit Gaza militant groups "like they've never dreamed possible," on Wednesday shortly after Israel said it killed 16 members of the Hamas military wing in an airstrike on Gaza.

At the same time, Palestinian militants rained rockets into Israel as global concern mounted over their most intense hostilities in years.

Netanyahu declared a state of emergency in Lod, near Tel Aviv, after reports that members of Israel's 21% Arab minority had set fire to synagogues and that Jews had stoned cars driven by Arab residents.

In Lod, men carried Torah scrolls through the blackened and debris-strewn yard of the torched synagogue.

In Tel Aviv, residents voiced fear and hope after a night of heavy rocket fire from Gaza.

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