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Israel stepped up its military offensive in Rafah on Tuesday, sending tanks into the heart of Gaza’s southernmost city despite growing international condemnation of the operation.

In the wake of a lethal Israeli air strike over the weekend that killed dozens of civilians, Israel pressed farther towards Rafah’s centre with military vehicles taking positions near the Awda roundabout, according to eyewitnesses.

At least five Israeli military combat brigades were operating by Tuesday in Rafah and the adjoining frontier with Egypt, called the Philadelphi corridor, pushing westwards into more densely populated areas of the city.

The scale of the military deployment suggests Israel is mounting its most significant operation inside Gaza for several months.

Israel considers Rafah Hamas’s last stronghold in Gaza and launched its assault earlier this month despite widespread international concern for the 1.4mn Palestinians that had sought refuge in the city.

Humanitarian organisations have warned about the risks to civilians of an operation in Rafah, where hundreds of thousands of Palestinians are sheltering, but the US state department on Tuesday said it did not believe Israel’s offensive amounted to a full-scale military assault that would cross any red lines set by President Joe Biden.

Matthew Miller, a state department spokesperson, said the US judged Israel’s operations to be on a more limited scale than its previous operations in Khan Younis and Gaza City. “This so far is a different type of military operation,” he added.

“We will continue to emphasise to Israel their obligation to comply fully with international humanitarian law, minimise the impact of their operations on civilians, and maximise the flow of humanitarian assistance to those in need,” Miller said.

According to the UN, about 1mn people have fled Rafah ahead of advancing Israeli troops, to what Israel describes as humanitarian “safe zones”, but which international aid groups have criticised as lacking basic infrastructure and supplies.

“Many citizens are trapped in the middle of the city,” said one Palestinian in the area.

Local officials in the Rafah governorate said later in the day that 21 people were killed, and dozens injured, by Israeli fire in an encampment of tents for the displaced in the city’s western outskirts.

The Financial Times could not immediately establish more details relating to the incident. Israel’s military denied any such attack: “Contrary to the reports from the last few hours, the [Israel Defense Forces] did not strike in the humanitarian area in Al-Mawasi.”

The report came just two days after an Israeli air strike killed at least 45 people in another camp for displaced people in the north-western Tal as-Sultan neighbourhood.

Miller said the US had expressed its “deep concern” to Israel over the incident and added that Washington was waiting for the results of the full Israeli investigation into the incident.

He noted that the IDF’s preliminary conclusions were that the strike hit 1.7km away from the area where civilians were seeking refuge.

Israeli leaders have made clear that nothing will stop the Rafah offensive, which is a bid to dismantle the last four standing Hamas battalions in the territory as well as to rescue Israeli hostages that the IDF says are being held in the area.

The IDF has also seized at least 50 per cent of the 14km-long Philadelphi corridor, according to one Israeli official. IDF infantry and combat engineers have been working to locate and destroy tunnels connecting Gaza to Egypt’s Sinai peninsula, which Hamas has allegedly used for years to smuggle weapons and commercial goods.

IDF spokesperson Daniel Hagari said the military was working “in a precise way, more accurate, more safe and sometimes slower” than past operations in the strip over the past seven months of war.

Hagari added that the military investigation was ongoing into the exact cause of the massive fires that raged through the makeshift shelters in Rafah over the weekend after an Israeli strike killed two senior Hamas operatives in a nearby compound.

According to Hagari, a preliminary Israeli military investigation has found that the strike, which deployed two relatively small 17kg munitions, hit only the targeted compound. But he said “another something” caused a second compound nearby to ignite.

“Our munition alone could not have ignited a fire of this size,” Hagari added, while emphasising that the camp was almost 200 metres away from the attack site. Israeli Prime Minister Benjamin Netanyahu on Monday called it a “tragic mistake”.

Martin Griffiths, the UN’s aid chief, said “no place is safe in Gaza”, as he described the attack at the weekend as an “abomination”.

“We have also warned that a military operation in Rafah would lead to a slaughter,” he said. “Whether the attack [at the weekend] was a war crime or a ‘tragic mistake’, for the people of Gaza, there is no debate.”

Pope Francis has issued an apology for using a derogatory term referring to gay men during a closed-door discussion among bishops earlier this month.

“The Pope never intended to offend or express himself in homophobic terms,” director of the Vatican press office Matteo Bruni said, “and he apologies to those who felt offended by the use of the term.”

During the meeting with Italian bishops at the Vatican last week, there was discussion of whether to admit gay men to Catholic seminaries in preparation for the priesthood.

Italian media reported that multiple people present at the meeting disclosed that Francis opposed the idea, saying there was already too much “frociaggine” in seminaries. Frociaggine is a highly offensive slang term in Italian referring to gay men and gay male culture.

The controversy is the latest in a series of moves that many LGBTQ Catholics view as sending mixed messages. Earlier this year, the Vatican issued a document titled Infinite Dignity referring to what it called “sex change” and “gender theory” as grave threats.

But late last year, Pope Francis issued guidance that allowed priests to bless people in same-sex relationships, although not to bless the relationship itself.

The Catholic Church’s official teaching on the matter is that homosexuality is intrinsically disordered and that sexual activity between people of the same sex is a grave sin.

Still, Bruni said on Tuesday, “As [Francis] has stated on many occasions, ‘There is room for everyone in the Church.’ ”

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Years of regulatory action against German fintech N26 for its poor anti-money laundering controls may have cost the business billions of euros, co-founder Valentin Stalf told the Financial Times, as authorities finally remove a cap on its growth.

Financial regulator BaFin in 2021 ordered online-only bank N26 to limit its new client sign-ups to 50,000 a month, compared with the average 170,000 a month it was taking on at the time. The cap was increased to 60,000 last year and it will be removed from June, according to N26. BaFin declined to comment.

The regulator disclosed last week that it had fined the bank €9.2mn for the persistent late filing of suspicious activity reports in 2022. This followed an earlier fine of €4.25mn in 2021 for similar problems in previous years. An independent monitor that oversees N26’s anti-money laundering controls on behalf of BaFin will remain in place, according to people familiar with the situation.

N26 said on Tuesday that the direct costs of the saga added up to €100mn, including spending on its control functions and monitoring systems, and the fines. But co-founder Valentin Stalf told the FT that the indirect costs were much higher.

“The impact on N26 surely amounts to billions of euros because it lowered the company’s valuation as we were unable to grow,” he said. In its most recent funding round in 2021 — before BaFin announced it was taking action — N26 was valued at €7.7bn.

Stalf said he was “pleased about the trust of our regulators” and stressed that the bank’s priorities had changed since 2021, meaning it would not return to its earlier expansion spree.

“Our key priority won’t be growth but profitability of clients and attractiveness of market,” he told the FT, adding that N26 wanted to create “a sustainable portfolio of clients which is profitable in the long run”.

He stressed that the business would “of course” grow from June, but declined to give a specific expansion target.

Business dynamics were also in its favour he claimed, saying N26 had “very strong demand” for its digital banking services and that “the market has not been carved-up by our competitors over the past two and a half years”.

N26 was on track to become profitable in the second half of this year, he said. Last year, it halved its losses to €100mn and reported a 27 per cent increase in revenues to more than €300mn. This year, it was hoping to increase revenues by up to 35 per cent, according to Stalf.

The business was founded in 2013 and has 8mn customers in 24 European countries, but in the past few years it has pulled back from some of its international expansion plans, exiting the UK, the US and Brazil.

It started out offering current accounts but has recently moved into brokerage services and savings accounts.

Stalf said N26 “did learn a lot over the past two and a half years from the close co-operation with the regulator” and that this experience would be “helpful for our next steps towards an IPO”.