Israel's defence minister told Hamas on Monday to lay down its arms or face annihilation, after US President Donald Trump said the militant group must accept a deal to release hostages in Gaza.

In Israel-annexed East Jerusalem, gunmen opened fire at a bus stop and killed five people, according to Israel's emergency service, in one of the deadliest incidents of its kind since the war in Gaza began.

In Gaza City, the civil defence agency said Israeli attacks killed 10 people overnight, after at least 48 others were killed across the territory on Sunday. AFP has contacted the Israeli military for comment.

Hamas, whose unprecedented October 2023 attack on Israel sparked the war, said shortly after Trump's comments that it was ready for immediate talks.

"This is a final warning to the Hamas murderers and rapists in Gaza and in luxury hotels abroad: Release the hostages and put down your weapons -- or Gaza will be destroyed and you will be annihilated," Israeli Defence Minister Israel Katz said on X.

Israel has stepped up operations, levelling high-rise buildings in Gaza City which it has vowed to capture, despite mounting international pressure to stop the war.

In Gaza City on Monday, bereaved father Issa Suleiman carried the body of his one-year old son, wrapped in a white shroud.

"We were sleeping in the tent with my three children and my wife," he told AFP, adding that five of his neighbours were killed and several seriously injured, including his wife and mother.

- 'Massive hurricane' -

Defence Minister Katz wrote on X that "today, a massive hurricane will hit the skies of Gaza City", where he said the military was "preparing to expand" operations.

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The attack in East Jerusalem was one of the deadliest incidents of its kind since war began in Gaza / © AFP

Media restrictions in Gaza and difficulties in accessing many areas mean AFP is unable to independently verify the tolls and details provided by the civil defence agency or the Israeli military.

Spain's Prime Minister Pedro Sanchez announced a series of measures aimed at stopping what he called "the genocide in Gaza", sparking a furious reaction from Israeli Foreign Minister Gideon Saar, who said it was part of an "antisemitic campaign".

Spain hit back, calling the accusations of antisemitism "false and slanderous".

In Geneva, United Nations rights chief Volker Turk said he was "horrified by the open use of genocidal rhetoric... by senior Israeli officials".

Following the attack in East Jerusalem, Israeli Prime Minister Benjamin Netanyahu said: "Let it be clear: these murders strengthen our determination to fight terrorism."

Israeli emergency service Magen David Adom (MDA) said that in addition to the five dead, seven of the injured were in serious condition. Police said the two gunmen were also killed.

- Ready to negotiate -

Trump said Sunday he was issuing a "last warning" to Hamas, insisting it accept a deal to release the hostages seized during their October 2023 attack that sparked the war.

The Israeli military says 47 hostages remain in Gaza, including 25 believed to be dead.

"The Israelis have accepted my terms. It is time for Hamas to accept as well. I have warned Hamas about the consequences of not accepting. This is my last warning," Trump said on social media, without elaborating further.

Hamas said shortly after his comments that it was ready to "immediately sit at the negotiating table" following what it described as "some ideas from the American side aimed at reaching a ceasefire agreement".

In exchange for a truce, Hamas said it wanted "a clear declaration of the end of the war, a full withdrawal from the Gaza Strip, and the formation of a committee of independent Palestinians to manage the Gaza Strip, which would begin its duties immediately".

US news outlet Axios reported that White House envoy Steve Witkoff sent a new proposal for a Gaza hostage and ceasefire deal to Hamas last week.

The White House has not released any details about the proposal, but Trump said "you'll be hearing about it pretty soon".

Hamas agreed last month to a ceasefire proposal that involved a 60-day truce and staggered hostage releases.

Israel, however, has demanded the militant group release all the hostages at once, disarm and relinquish control of Gaza, among other conditions.

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Palestinian Rania Abu al-Qumbuz, 50, mourns by the body of her three-year-old granddaughter Rania Bakaroun, who was killed in an Israeli strike / © AFP

Hamas's October 7, 2023 attack on Israel resulted in the deaths of 1,219 people, mostly civilians, according to an AFP tally based on Israeli figures.

Israel's retaliatory offensive has killed at least 64,522 Palestinians, most of them civilians, according to figures from the health ministry in Hamas-run Gaza that the United Nations considers reliable.