(Corrects seventh paragraph to say 'humanitarian', not 'military')
* Efforts proceed to secure permanent ceasefire
* Israel keeps focus on militant tunnels in Gaza
* Tensions high in West Bank after deadly clashes
* 985 Palestinians killed in Gaza since July 8
By Nidal al-Mughrabi and Maayan Lubell
GAZA/JERUSALEM, July 26 (Reuters) - Palestinians in the Gaza Strip poured into the streets on Saturday to recover their dead and stock up on food supplies after a 12-hour humanitarian truce agreed by Israel and Hamas took hold on the 19th day of their conflict.
Women in the northern town of Beit Hanoun wailed as medics pulled three dead relatives from a home struck overnight by an Israeli air strike, with hospital officials saying 85 bodies had been found after the guns fell silent at 8 a.m. (0500 GMT).
Just before the truce started, 18 members of a single family, including five children, died in a strike near the southern town of Khan Younis, the Gaza Health Ministry said.
Israel's military pledged to hold fire for 12 hours but said it would carry on searching for tunnels used by militants. The Islamist group Hamas, which dominates Gaza, said all Palestinian factions would abide by the brief truce.
U.S. Secretary of State John Kerry has been spearheading international efforts to end the fighting, in which 985 Palestinians, many of them civilians, have been killed. His diplomatic push was to continue on Saturday in Paris.
French Foreign Minister Laurent Fabius said that the foreign ministers of all seven countries involved in the diplomacy - the United States, France, Britain, Italy, Germany, Turkey and Qatar - had called for an extension of the truce.
"All of us call on the parties to extend the humanitarian ceasefire that is currently under way," Fabius said.
Israel said two more of its soldiers were killed in pre-truce fighting in Gaza, bringing the army death toll to 37 as troops battled militants in the tiny Mediterranean enclave that is home to 1.8 million Palestinians.
Two Israeli civilians and a Thai labourer have also been killed by rockets fired from Gaza. Israel launched its offensive on July 8, vowing to halt repeated rocket fire out of Gaza by Hamas militants who want to break a blockade of the territory.
Stunned residents of Beit Hanoun wandered through destroyed streets lined with damaged houses or mounds of rubble where once whole buildings had stood. Some who had not seen each other for days embraced as they surveyed the wreckage around them.
Many of Beit Hanoun's 30,000 residents had fled the area. "We hope the calm lasts and they find a solution so fighting ends. We are afraid for our children's safety," she said, adding she will not leave her home. "There is no place to go."
Israeli tanks stood by as people searched through the debris for their belongings, packing whatever they could, blankets, furniture and clothes into taxis, trucks, rickshaws and donkey carts before fleeing the town.
Naser Tattar, director of Gaza's main Shifa hospital, said most of the bodies recovered on Saturday came from Beit Hanoun, Khan Younis and Shejaia -- a district east of Gaza City. Residents returning to that neighbourhood found entire blocks flattened.
Fighting continued until the truce took hold. Militants fired a barrage of rockets out of Gaza, triggering sirens across much of southern and central Israel. No injuries were reported and the Iron Dome interceptor system shot down some missiles.
Minutes after the truce began, many Gaza residents rushed out of their homes and lined up outside banks to withdraw cash. Gaza City market was packed with people buying food and clothes for the coming Muslim holiday of Eid al-Fitr.
"For us the Eid is going to be another day of war, another day of grief. I hope it all ends before we lose more people," said Shaima Mahmoud who was shopping with her four-year-old daughter for a holiday dress.
Israel on Friday rejected international proposals for an extended ceasefire, a government source said. But Kerry said in Cairo that no formal proposals had yet been put forward.
He said there were still disagreements on the terminology, but he was confident there was a framework that would ultimately succeed and that "serious progress" had been made, although there was more work to do.
Israel's and Hamas's positions are still far apart.
Hamas wants an end to an Israeli-Egyptian blockade of Gaza before agreeing to halt hostilities. Israeli officials said any ceasefire must allow the military to carry on hunting down Hamas's tunnel network that criss-crosses the Gaza border.
Israel says some of the tunnels reached into Israel and were meant to carry out attack on Israelis. Other underground passages serve as weapon caches and Hamas bunkers.
Israeli Defence Minister Moshe Yaalon said on Friday the military could widen its Gaza offensive.
"You must be prepared for the possibility that we will soon instruct the IDF (Israel Defence Forces) to significantly expand the ground operation in Gaza," Yaalon was quoted by his office as telling Israeli troops at an Iron Dome battery.
The Gaza turmoil has stoked tensions amongst Palestinians in East Jerusalem and the occupied West Bank.
Medics said eight Palestinians were killed in incidents near the West Bank cities of Nablus and Hebron on Friday -- the sort of death toll reminiscent of previous uprisings against Israel's prolonged military rule there, which shows no sign of ending.
On Thursday night, 10,000 demonstrators marched in solidarity with Gaza near the Palestinian administrative capital Ramallah. Protesters surged against an Israeli army checkpoint, throwing rocks and Molotov cocktails, and Palestinian medics said one was shot dead and 200 wounded when troops opened fire.
The Palestine Liberation Organization of Western-backed Palestinian President Mahmoud Abbas called for more demonstrations in the West Bank and said it was helping to try to secure a ceasefire deal. (Additional reporting by Noah Browning in Gaza and Arshad Mohammed in Paris; Writing by Maayan Lubell; Editing by Tom Heneghan, Crispian Balmer and Stephen Powell)
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