By Alexander Cornwell, Parisa Hafezi and Jeff MasonTEL AVIV/DUBAI/WASHINGTON (Reuters) -Israel and Iran kept up their attacks, killing and wounding civilians and raising concern among world leaders meeting in Canada this week that the biggest battle between the two old enemies could lead to a broader regional conflict.

At least seven people were killed and more than 100 injured when an Iranian ballistic missile hit Bat Yam, just south of Tel Aviv, overnight on Sunday, domestic media reported. Other reports put the death toll at six people. Israel's police said residential buildings took a "direct hit that caused extensive damage."

Israel unleashed airstrikes across Iran for a third day and threatened even greater force as some Iranian missiles evaded Israeli air defenses to strike buildings in the heart of the country.

Tel Aviv stocks erased early losses and ended higher on Sunday in the first trading session since the start of a wave of missile strikes between Israel and Iran on Friday, as Israel and its economy attempt to remain as open as possible.

Iranian Foreign Minister Abbas Araghchi said Sunday that if the Israeli strikes on Iran stop, then “our responses will also stop.”

Sirens sounded in Israel as Iran launched dozens of ballistic missiles in retaliation for Israel's strikes on its nuclear facilities.

Explosions have been seen over Tel Aviv and Jerusalem as the country faces yet another barrage of missiles from Iran. It comes after explosions were reported in central Tehran, as attacks continue between Iran and Israel.

Missiles and projectiles were seen in the skies over Jerusalem and Tel Aviv early on Sunday as Tehran unleashed a fresh attack on Israel which in turn launched an expanded assault on Iran.

Israel has launched a series of strikes against Iran, targeting the country’s nuclear program and other military infrastructure. Iran has launched its own strikes in retaliation.