Meanwhile Donald Trump says his early G7 exit has "nothing to do" with an Israel-Iran ceasefire, as fighting between the two nations enters a fifth day.

A rare daytime missile barrage on Tel Aviv forces millions into shelters as Israeli forces retaliate against Iran's missile-launching capabilities.

NBC News' Richard Engel reports from north of Tel Aviv where an Iranian missile penetrated Israel’s air defense system and struck a bus depot.

By Alexander Cornwell, Parisa Hafezi and Jeff Mason TEL AVIV/DUBAI/WASHINGTON (Reuters) -Iranian missiles struck Israel's Tel Aviv and the port city of Haifa on Monday, destroying homes and fuelling concerns among world leaders at this week's G7 meeting that the battle between the two old enemies could lead to a broader regional conflict.

At least three people were killed and scores were wounded during an aerial battle over Tel Aviv, as Iranian missiles rained down and Israeli rockets attempted to intercept them.

Air raid sirens could be heard across the Israeli city of Tel Aviv in the early hours of Tuesday morning, as Iranian media reported that military forces had launched missiles at Israel.

Onlookers gathered on Saturday at a central Tel Aviv residential building next door to Israel’s defense headquarters that was damaged after it took a hit from what appeared to be shrapnel from an overnight missile barrage from Iran.

Fox News reporter Trey Yingst was standing on a balcony as short-range missiles behind him appeared to come closer before being intercepted by Israel's Iron Dome defense system. The footage of the incident preceded a night in which Israel and Iran traded fire, with explosions heard in Tel Aviv, Jerusalem and Tehran.