* Flare-up has included heaviest rocket barrage in two years
* Egypt trying to mediate halt to violence (Adds Egyptian mediation, Netanayhu comment)
JERUSALEM, March 13 (Reuters) - Palestinian militants in the Gaza Strip fired rockets at Israeli cities on Thursday in the second day of a cross-border flare-up that has drawn Israeli warnings of a tough military response.
A Palestinian official said Egypt, which has brokered previous ceasefires between Israel and militants in Gaza - ruled by the Islamist Hamas group, was trying to restore calm.
Sirens sounded in the southern Israeli towns of Ashkelon and Ashdod. Police said the rockets had landed in open areas, causing no casualties.
The Israeli military carried out 29 air strikes and fired tank shells at militant targets in the Gaza Strip on Wednesday after the Islamic Jihad group launched 60 rockets towards Israel in the heaviest such barrage in nearly two years.
No casualties were reported on either side of the frontier in Wednesday's incidents. Islamic Jihad said its rocket fire had been a response to Israel's killing of three of its members a day earlier.
Prime Minister Benjamin Netanyahu said in a statement that Israel would "hit back with increasing force" against anyone who tried to ruin celebrations over the next few days of the Jewish holiday of Purim.
A Palestinian official said Egypt, which made peace with Israel in 1979 and controls the Rafah border crossing that is Gaza's transit point to the outside world, had stepped in.
"Egyptian officials have made contacts with both sides to restore calm," said the official, with direct knowledge of the talks. (Additional reporting by Nidal al-Mughrabi in Gaza; Writing by Maayan Lubell; Editing by Jeffrey Heller and Louise Ireland)