Israel and Iran have traded more missile attacks despite international calls for a halt to the fighting, with neither country showing signs of backing down as the conflict between the regional foes raged for a third day.

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.

Experts have said it is likely that Iran is using the bulk of its ballistic missiles to “distract and saturate” air defences to create an opening for more advanced weapons. That missile appears to be the Shahed Haj Qassem, which was fired at Israel for the first time at the weekend.

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.

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.

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.

"Another barrage of dozens of rockets was launched" towards Israel, the statement adds. The IDF says that the explosions people are hearing "originate from interceptions or impacts". We've been hearing from Iran's Supreme Leader Ali Khamenei who says Iran “will inflict heavy blows” after Israel “launched war”.

Israel and Iran launched fresh attacks, killing and wounding civilians and raising concerns of a broader regional conflict.