Israeli soldiers battled Hamas fighters in the streets of southern Israel on Sunday and launched retaliation strikes that leveled buildings in Gaza, There was still some fighting underway more than 24 hours after an unprecedented surprise attack from Gaza, in which Hamas fighters, backed by a volley of thousands of rockets, broke through Israel’s security barrier and rampaged through nearby communities. The fighters took captives back into the coastal Gaza enclave, including women, children and the elderly, who they will likely try to trade for thousands of Palestinian prisoners held by Israel. The high death toll, multiple captives and a slow response to the onslaught pointed to a major intelligence failure and undermined the long-held perception that Israel has eyes and ears everywhere in the small, densely populated territory it has controlled for decades. Israeli Prime Minister Benjamin Netanyahu said the country was at war and would exact a heavy price from its enemies. Hamas leaders said they were prepared for further escalation. Hamas has been branded a terrorist organization by the West and Israel. It refuses to recognize the state of Israel and opposes the interim Oslo peace accords which Israel and the Palestinian Liberation Organization negotiated in the mid-1990s. Hamas won Palestinian parliament elections in 2006, and seized full control of Gaza in 2007, after driving out the forces loyal to its political rival, internationally recognized Palestinian President Mahmoud Abbas. A major question now was whether Israel will launch a ground assault into Gaza, a move that in the past has brought intensified casualties. Civilians paid a staggering cost for the violence on both sides. In northern Israel, a brief exchange of strikes with Lebanon’s Hezbollah militant group raised fears of a broader conflict.