Avihai Mandelblit, a recently retired chief advocate general in the Israeli military, said that from a legal perspective, "there's no immunity to anyone if you put weapons inside of civilian infrastructure."
But he acknowledged the sight of dead civilians could create a public relations debacle for Israel. "As more civilians will get hurt, the legitimacy clock is going to click faster to end this operation," he said.
Obama said he had been in touch with Netanyahu as well as the leaders of Egypt and Turkey as international attempts to broker a cease-fire continued. Egypt, which often serves as a mediator between Israel and Hamas, has taken a leading role in the efforts.
Israeli TV stations said an Israeli envoy traveled to Cairo on Sunday, and was returning to Israel with details of cease-fire proposals. Channel 2 TV, citing American diplomats, said Netanyahu's personal envoy, Yitzhak Molcho, would be headed to Washington in the coming days.
Hamas officials said their supreme leader, Khaled Meshaal, also held talks with Egyptian President Mohammed Morsi, and that Turkish Foreign Minister Ahmet Davutoglu was to visit Gaza on Tuesday.
Israel and Gaza's militant Hamas rulers remain far apart on any terms for a halt to the bloodshed.
Hamas is linking a truce deal to a complete lifting of the border blockade on Gaza imposed since Islamists seized the territory by force. Hamas also seeks Israeli guarantees to halt targeted killings of its leaders and military commanders. Israeli officials reject such demands.
They say they are not interested in a "time-out," and want firm guarantees that militant rocket fire into Israel will end. Past cease-fires have been short lived.
Federman reported from Jerusalem. Associated Press Writer Lauren E. Bohn in Jerusalem contributed to this report.
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