A thick column of smoke rose in the heart of Beirut and Reuters witnesses said at least one strike hit near a gas station in a densely packed residential neighbourhood of apartment buildings and small shops.
A large fire blazed in the background as rescue workers used torches to search the rubble for survivors, according to video broadcast by Hezbollah’s al-Manar television.
The identity of the Hezbollah target was not clear. The neighbourhood was not previously hit by Israel and is well removed from Beirut's southern suburbs, Iran-backed Hezbollah's headquarters repeatedly bombed by Israel.
There was no immediate comment on the incident by Israel, but its army issued a new evacuation warning on Thursday night for Beirut's southern suburbs including specific buildings.
Earlier in the day, Israel warned Lebanese civilians not to return to homes in the south to avoid harm from fighting.
The UNIFIL force said two of its peacekeepers were injured when an Israeli tank fired at a watchtower at the force's main headquarters in Ras al-Naqoura, hitting the tower and causing the peacekeepers to fall. There were no casualties in two other incidents, a UN source said.
"Any deliberate attack on peacekeepers is a grave violation of international humanitarian law," UNIFIL said in a statement, adding it was following up with the Israeli military.
The White House said the U.S. was deeply concerned by reports that Israeli forces fired on UN positions and was pressing Israel for details.
"Accordingly, the IDF instructed the UN forces in the area to remain in protected spaces, following which the forces opened fire in the area," Israel's statement said, adding it maintains routine communication with UNIFIL.
Hezbollah said it had fired a missile salvo at Israeli forces on Thursday as they were trying to pull casualties out of the Ras al-Naqoura area, and they were directly hit.
In New York, Israel's UN Ambassador Danny Danon said Israel was focused on fighting Hezbollah and recommends "UNIFIL relocate 5 km (3 miles) north to avoid danger as fighting intensifies". Reuters reported last week that the Israeli military had sent a message asking UN peacekeepers to prepare to move "as soon as possible, in order to maintain your safety".
Danon added that "Israel has no desire to be in Lebanon, but it will do what is necessary" to drive Hezbollah away from its northern border so 70,000 displaced residents can return to their homes in northern Israel.
The conflict erupted one year ago when Hezbollah opened fire in support of Palestinian militant group Hamas at the start of the Gaza war. It has intensified dramatically in recent weeks, with Israel bombing Beirut's southern suburbs, the south and the Bekaa Valley, before sending in ground forces.
The Middle East remains on high alert for further escalation in the region, awaiting Israel's response to an Iranian missile strike on Oct. 1.
Gulf states are lobbying Washington to stop Israel attacking Iran's oil sites because they are concerned their own oil facilities could come under fire from Tehran's proxies if the conflict worsens, three Gulf sources told Reuters.
U.S. President Joe Biden and Israeli Prime Minister Benjamin Netanyahu spoke on Wednesday about potential Israeli retaliation against Iran, in a call both sides described as positive.
Israeli strikes have killed at least 2,169 people in Lebanon over the last year, the Lebanese government said in its daily update. The majority have been killed since Sept. 27, when Israel expanded its military campaign. The toll does not distinguish between civilians and combatants.
Hezbollah cross-border fire at Israel has killed 53 people over the same period, more than half of them civilians, according to Israeli authorities.