* Palestinian officials say 60 civilians among 76 killed
* Two Palestinian rockets shot down over Tel Aviv
* Security Council called; US wants de-escalation
* Israel drafts 20,000 reservists, weighs invasion (Updates Palestinian death toll, adds Hamas spokesman)
By Nidal al-Mughrabi and Jeffrey Heller
GAZA/JERUSALEM, July 10 (Reuters) - At least 76 Palestinians, most of them civilians, have been killed in Israel's Gaza offensive, Palestinian officials said on Thursday, and militants kept up rocket attacks on Tel Aviv and other cities in warfare showing no signs of ending soon.
Eight Palestinian family members, including five children, were killed in an early morning air strike that destroyed at least two homes in Khan Younis in southern Gaza, the Palestinian Health ministry said.
Israel's military made no comment on what would be the deadliest strike since the offensive began on Tuesday.
"We have long days of fighting ahead of us," Israeli Defence Minister Moshe Yaalon said on Thursday on Twitter of the offensive which began after a build-up of violence following the killing of three Jewish students last month and the murder of a Palestinian teen in a suspected revenge attack.
U.N. Secretary-General Ban Ki-moon, who will brief the Security Council on the crisis later on Thursday, condemned the rocket attacks and urged Israel to show restraint. "Gaza is on a knife edge," he told reporters.
Medical officials in Hamas-dominated Gaza said at least 60 civilians, including a four-year-old girl and boy, aged 5 who were killed on Thursday, were among the 76 Palestinians who have died in Israeli attacks since Tuesday.
Israel says it has struck more than 750 targets in an offensive intended to halt persistent rocket fire at its own civilian population, which escalated after Israeli forces arrested hundreds of Hamas activists in the occupied West Bank following the abduction of the Jewish teenagers.
It accuses Hamas Islamists of deliberately putting innocent Palestinians in harm's way by placing weaponry and gunmen in residential areas.
Across the Gaza Strip, smoke and rubble marked the aftermath of Israeli attacks in the most serious hostilities between Palestinian militants and Israel's powerful armed forces in two years.
"The Jews say they are fighting Hamas and fighting gunmen while all the bodies we have seen on television are those of women and children," said Khaled Ali, 45, a Gaza taxi driver.
Rocket salvoes on Israel - the military said 442 projectiles have been fired since Tuesday, including nearly 100 on Thursday alone - have caused no fatalities or serious injuries. That has been due in part to interceptions by Israel's partly U.S.-funded Iron Dome aerial defence system.
The wail of air raid sirens has paralysed business in southern communities and sent hundreds of thousands of people scrambling for shelter in Tel Aviv, the commercial capital where two rockets were shot down on Thursday, but offices and shops remain open and roads are clogged with traffic.
Cities close to the northern port of Haifa and the holy city of Jerusalem have also been targeted.
Hamas spokesman Sami Abu Zuhri sounded a defiant note, when asked about Yaalon's remarks.
"Our backs are to the wall and we have nothing to lose," Abu Zuhri said. "We are ready to battle until the end."
"KNOCK ON THE DOOR"
Israel's targets in the Gaza Strip have included militant commanders' homes, which it described as command and control centres. Palestinian officials put the number of dwellings either destroyed or damaged at more than 120. Local residents said some of the houses did not belong to fighters.
Prime Minister Benjamin Netanyahu, in a statement on Wednesday, said Hamas was committing "a double war crime".
"It targets Israeli civilians, while hiding behind Palestinian civilians," he said.
Owners of some of the targeted homes received telephoned warnings from Israel to get out, or so-called "knock-on-the-door" missiles, which do not carry explosive warheads, were first fired as a signal to evacuate.
Scenes of families fleeing their homes have been playing out daily.
Israeli leaders, who have popular support for the Gaza offensive, have also warned the air offensive could be expanded into a ground invasion of one of the world's most densely populated territories.
Some 20,000 reservists have been mobilised, the military says.
U.S.-backed Palestinian President Mahmoud Abbas, who is based in the West Bank and entered a power-sharing deal with Hamas in April after years of feuding, has denounced the Israeli offensive.
In telephone calls with U.S. Secretary of State John Kerry and Turkish Prime Minister Tayyip Erdogan, Abbas "stressed the need to achieve a ceasefire immediately", the official Palestinian news agency WAFA said on Thursday.
Palestinian militants intensified their cross-border rocket fire toward Israel in mid-June, after Israeli forces had arrested hundreds of Hamas activists in the West Bank in tandem with a search for the three missing high school students.
The violence spiralled as Israel mounted air strikes and militants shot more rockets across the border.
Egypt brokered a truce in the 2012 war but such a role could prove difficult now.
Accusing Hamas of aiding militants in Egypt's Sinai peninsula - an allegation Hamas denies - the military-backed government in Cairo has destroyed smuggling tunnels through which cash, weaponry and consumer goods flowed to Gaza, which has been under tight Israeli and Egyptian border restrictions.
While backing Israel's right to self-defence, Washington on Wednesday called on both sides to de-escalate. (Additional reporting by Dan Williams and Allyn Fisher-Ilan in Jerusalem and Ali Sawafta in Ramallah; Writing by Jeffrey Heller; Editing by Giles Elgood)