Israeli troops battled Hamas militants on Wednesday near a southern Gaza Strip town as the top U.S. diplomat reported progress in efforts to end fighting that has so far killed more than 680 Palestinians and 34 Israelis.

But neither side appeared to be backing down, after Palestinian rocket fire led several international airlines to cancel flights to Tel Aviv and Israeli troops clashed with Hamas near the Gaza town of Khan Younis in heavy fighting that forced dozens of families to flee.

Israel has insisted it must substantially curb the military capabilities of the Islamic militant group Hamas -- a position that appears to have gained support within the U.S. administration -- while Hamas has demanded the lifting of a crippling Israeli and Egyptian blockade on the impoverished coastal territory it has ruled since 2007.

U.S. Secretary of State John Kerry flew into Tel Aviv despite a Federal Aviation Administration ban following a Hamas rocket that hit near the airport the day before, reflecting his determination to achieve a cease-fire.

He was to meet with Israeli Prime Minister Benjamin Netanyahu after earlier talks with Palestinian President Mahmoud Abbas and U.N. chief Ban Ki-moon, who is also in the region. But U.S. officials have downplayed expectations for an immediate, lasting truce.

In Jerusalem, Kerry said negotiations toward a Gaza cease-fire were making some progress as he met for a second time this week with Ban. "We certainly have made steps forward," Kerry said. "There's still work to be done."