Israel has freed two Israeli-Argentinian hostages in Rafah under the cover of air strikes that local health officials say killed 67 Palestinians and wounded dozens in the southern Gaza city that is the last refuge of about a million displaced civilians.
A joint operation early on Monday by the Israeli military , the domestic Shin Bet security service and the Special Police Unit in Rafah freed Fernando Simon Marman, 60, and Louis Hare, 70, the military said.
The two men were kidnapped by Hamas from Kibbutz Nir Yitzhak on October 7, the military said, among some 250 people who Israel says were seized during the militant raid that triggered its war on Gaza.
"We've been working a long time on this operation," Israeli military spokesman Lieutenant Colonel Richard Hecht said.
"We were waiting for the right conditions."
The hostages were being held on the second floor of a building that was breached with explosives during the raid, which included heavy exchanges of gunfire with surrounding buildings, Hecht said.
A photograph released to media showed them in Israel's Sheba hospital, sitting on a sofa alongside relatives.
Israel's military said its air strikes had coincided with the raid to allow its forces to be extracted.
The Gaza health ministry said 67 people had been killed and the number could rise as rescue operations were under way.
A photograph from the scene showed a vast area of rubble where buildings had been destroyed.
Palestinians in Rafah said two mosques and several houses were hit in more than an hour of strikes by Israeli warplanes, tanks and ships, causing widespread panic among people who had been asleep.
Some feared Israel had begun a long-feared ground offensive in the city, where more than a million people displaced by Israel's war on Hamas are sheltering with nowhere else to go.
A relative of one of the hostages said he had seen both freed men in hospital and found them "a bit frail, a bit thin, a bit pale" but overall in good condition.
Idan Bejerano, son-in-law of Hare, said the hostages had both been sleeping when "within a minute" the commandos were in the building and covering them as they fought the captors.
Hamas said the attack on Rafah was a continuation of a "genocidal war" and forced displacement attempts Israel has waged against the Palestinian people.
Hamas militants killed 1200 people in southern Israel and abducted at least 250 in their October 7 incursion, according to Israeli tallies.
Israel has responded with a military assault on the Gaza Strip that has killed more than 28,000 Palestinians, according to the Hamas-run health ministry in the enclave.
US President Joe Biden told Prime Minister Benjamin Netanyahu on Sunday that Israel should not start a military operation in Rafah without a credible plan to ensure the safety of the more than one million people sheltering there, the White House said.
Aid agencies say an assault on Rafah would be catastrophic. It is the last relatively safe place in an enclave devastated by Israel's military offensive.
Egypt has reinforced its border with the city, saying it fears Gazans will be pushed across, never to return.
An Israeli official has said people will be moved further north but its forces are also active in central Gaza.
Palestinian medics said 15 people had been killed in an air strike in the central town of Deir Al-Balah.
Biden and Netanyahu spoke for about 45 minutes, days after the US leader said Israel's military response in the Gaza Strip had been "over the top" and expressed grave concern over the rising civilian death toll in Gaza.
Netanyahu's office has said it had ordered the military to develop a plan to evacuate Rafah and destroy four Hamas battalions it says are deployed there.
Netanyahu said in an interview aired on Sunday that "enough" of the 132 remaining Israeli hostages held in Gaza were alive to justify Israel's war in the region.
Hamas-run Aqsa Television quoted a senior Hamas leader as saying any Israeli ground offensive in Rafah would "blow up" the hostage-exchange negotiations.
Egypt warned on Sunday of "dire consequences" of a potential Israeli military assault on Rafah.