(CNN) - The latest attempt at an Israel-Hamas cease-fire disintegrated Friday. After the capture of an Israeli soldier, the conflict edged closer to escalation than to peace.
The soldier was "abducted" by Palestinian militants during an attack in Gaza in which two other Israeli soldiers died, Israeli military Lt. Col. Peter Lerner told CNN's Wolf Blitzer. The soldiers were decommissioning a tunnel at the time, Lerner said.
The Israel Defense Forces earlier identified soldier as 2nd Lt. Hadar Goldin. A search operation is under way to find him, Lerner confirmed.
Hamas spokesman Osama Hamdan denied the group had captured a soldier.
"It's clear that the capture of the soldier is an Israeli story; there's nothing from the resistance saying there was a capture," he told CNN.
Hopes for an announced 72-hour humanitarian cease-fire between Israel and Hamas didn't even last two hours, by some accounts. As has been a hallmark of the conflict, each side blamed the other for resuming the fighting.
The pause appears to have eroded after about 1½ hours in Rafah, a city in southern Gaza, with the deadly attack in which Goldin, 23, was taken. Lerner told reporters that while the soldiers were decommissioning a tunnel, a militant emerged from the tunnel and detonated a suicide bomb.
Around that time, Palestinian sources told CNN they could hear shelling in the area. The Gaza Health Ministry said an Israeli attack on Rafah killed at least 40 people and wounded 250.
Hamdan blamed Israel's actions for violating the cease-fire, saying the Palestinian militants have the right to protect themselves.
The IDF told a different version, saying its troops in Rafah were attacked in a "brutal incident" that required them to defend themselves. At the same time, rockets were fired from Gaza into southern Israel, Mark Regev, spokesman for Israel's Prime Minister, told CNN.
U.S.: Hamas used cease-fire as cover for attack
If the clash in Rafah is corroborated, it would be a violation by Gaza militants of the cease-fire that had been in place, said Robert Serry, U.N. special coordinator for the Middle East peace process. The violation would be "condemned in the strongest terms," he said.
The office of U.N. Secretary-General Ban Ki-moon clarified that the "U.N. has no independent means to verify exactly what happened."
The narrative emerging from Washington was that Hamas used the cease-fire as cover to attack the soldiers in the tunnel. White House Press Secretary Josh Earnest and U.S. Deputy National Security Adviser Tony Blinken used this same language in remarks Friday. Earnest called the turn of events "rather barbaric."
But the military wing of Hamas disputes that. According to the Al Qassam Brigades, they carried out an attack on Israeli troops before the cease-fire took effect. In a statement, the group mentions that Israeli soldiers were killed as a result of the battle, but does not mention the capture of a soldier.
A second Hamas spokesman said Israel broke the Friday cease-fire before and after the hiatus by advancing its forces near civilian areas in Rafah and by occupying civilian homes to use as sniper positions.
U.S. Secretary of State John Kerry called the attack "an outrageous violation of the cease-fire."
CNN teams in Gaza also witnessed the following as the cease-fire crumbled:
-- At about 10:30 a.m. local time, 2½ hours after the cease-fire was implemented, Israeli tanks could be seen maneuvering in Tofah, in east Gaza. At least three tank rounds were fired.
-- At about 11:30 a.m., warning shots were fired as a CNN crew approached a destroyed building, likely by militants.
-- At about 11:45 a.m., CNN witnessed three rockets being fired from eastern Gaza toward Israel.
-- At about 12:30 p.m., Gazans reported receiving robo-calls, apparently from the IDF, warning residents to stay inside their homes for their own safety.
1 killed in West Bank protest
Before the cease-fire plan was announced, Israeli Prime Minister Benjamin Netanyahu had said Israeli troops would continue destroying Hamas' network of tunnels that run under the border into Israel with or without a truce.
Hamdan, the Hamas spokesman, said that this part of the truce was not communicated to his group. He said Hamas' understanding was that there would be no military activity at all.
The humanitarian truce had been announced Thursday by the United Nations and United States, after weeks of fighting and more than 1,500 deaths in Gaza, most of them civilians. It came into effect at 8 a.m. Friday in Gaza (1 a.m. ET).
Kerry and U.N. Secretary-General Ban Ki-moon had said the halt to hostilities was planned to last for 72 hours and provide an opportunity to seek a more lasting solution to the conflict.
Many Gaza residents have seen their neighborhoods hit hard and loved ones killed or wounded since Israel began Operation Protective Edge against Hamas on July 8.
Around a quarter of a million people in the small, impoverished territory have been displaced by the conflict, according to the United Nations. That's about 14% of Gaza's population of 1.8 million.
The conflict has caused outrage around the world, including in the Palestinian West Bank, where thousands protested on Friday. One Palestinian was killed in Tulkarem during clashes with the Israeli military, Palestinian paramedics told CNN.
The Arab world has been accused of being silent on the Gaza conflict, but Saudi Arabia's King Abdullah on Friday released a statement condemning the violence.
Palestinians "are being subjected to mass massacres and crimes against humanity without any humane or moral grounds to the point that terrorism has taken different forms," King Abdullah said. "Especially the state sponsored terrorism which is the most dangerous form."
Hamas has said it wants an end to Israel's blockade on Gaza, which restricts the movement of goods and people. It also wants the release of prisoners detained by the Israelis.
Israel, meanwhile, has says it is aiming for the demilitarization of Hamas-controlled Gaza, removing the threat that militant weapons pose to Israeli civilians.
Those killed in the current hostilities include 327 children and 166 women, the Gaza health ministry reports.
Three civilians have been killed in Israel since the conflict began, while many more have been forced to take shelter as rockets rained overhead. Sixty-one Israeli soldiers have been killed during the hostilities, with five of those deaths occurring Thursday evening.