Israeli media reported that three people were killed in the country's centre while dozens more were wounded in the overnight strikes.
Live video footage also showed several missiles over Tel Aviv and explosions could be heard there and over Jerusalem. Some residential buildings in Tel Aviv had been struck, Reuters witnesses said.
Iran's Revolutionary Guards said the latest attack employed a new method that caused Israel's multi-layered defence systems to target each other.
At least 10 people in Israel, including children, were killed in earlier strikes, authorities there had said.
Group of Seven leaders began gathering in the Canadian Rockies on Sunday with the Israel-Iran conflict expected to be a top priority.
“This issue will be very high on the agenda of the G7 summit,“ Merz told reporters.
Iran has told mediators Qatar and Oman that it is not open to negotiating a ceasefire while it is under Israeli attack, an official briefed on the communications told Reuters on Sunday.
Explosions shook Tel Aviv on Sunday during Iran's first daylight missile attack since Israel's strike on Friday. Shortly after nightfall, Iranian missiles hit a residential street in Haifa, a mixed Jewish-Arab city, and in Israel's south.
“It’s very dreadful. It’s not fun. People are losing their lives and their homes,“ said Shem, 29.
Brent crude futures were up $0.70, or 1%, to $74.94 a barrel in Asian trade on Monday having jumped as much as $4 earlier in the session. While the spike in oil prices has investors on edge, stock and currency markets were little moved in Asia.
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When asked about the Reuters report, Netanyahu told Fox News on Sunday: “There’s so many false reports of conversations that never happened, and I’m not going to get into that.”
Israel began the assault with a surprise attack on Friday that wiped out the top echelon of Iran's military command and damaged its nuclear sites, and says the campaign will escalate in the coming days.
Iran has vowed to “open the gates of hell” in retaliation.
Trump has lauded Israel's offensive while denying Iranian allegations that the U.S. has taken part and warning Tehran not to widen its retaliation to include U.S. targets.
The U.S. president has repeatedly said Iran could end the war by agreeing to tough restrictions on its nuclear program, which Iran says is for peaceful purposes but which Western countries and the IAEA nuclear watchdog say could be used to make an atomic bomb.
The latest round of nuclear negotiations between Iran and the U.S., due on Sunday, was scrapped after Tehran said it would not negotiate while under Israeli attack.
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