GAZA/JERUSALEM—Israel pummelled Gaza with air strikes and Palestinian terrorists launched rocket barrages at Israel on Saturday, with no sign yet of an end to the worst escalation in years after six days of conflict and amid a rising death toll. U.S. and Arab diplomats were seeking to calm the situation after a night of violence that saw terrorists fire about 200 rockets at cities in Israel, whose planes struck what it said were targets used by Hamas, a terrorist group. At least 136 people have been killed in Gaza since hostilities erupted on Monday, including 34 children and 21 women, with 950 others wounded, Palestinian medics said. Israel has reported eight dead, including a soldier on the Gaza border and six civilians, two of them children. Overnight, the Israeli bombardment killed at least 12 Palestinians in Gaza, medics said, including a woman and four of her children who died when their …