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The BBC's Ben Brown says the Gaza-Israel border remains quiet
People in Gaza have been attempting to return to normal life as a ceasefire between Israel and Hamas, in effect since Wednesday, appears to be holding.
A number of rockets were fired from Gaza in the first few hours of the truce, but Israel did not respond.
However, Israeli schools close to the Gaza Strip were kept closed on Thursday as a precaution.
Overnight, Israeli security forces arrested 55 people in the West Bank who it said were "terror operatives".
The arrests come after a series of angry protests in the Palestinian territory over Israel's operation in Gaza. Two protesters were killed during clashes with Israeli soldiers.
The Israel Defense Forces (IDF) said the arrested people were all affiliated with terror groups and included a number of "senior level operatives".
The arrests, including 13 in Hebron, were part of efforts to "restore calm" to the area, said the IDF.
The Israeli military said three rockets had been fired from Gaza since the ceasefire came into effect, two of which were shot down by the Iron Dome defence system. It said there had been no fire in either direction since midnight.
'New start'Israel launched an offensive against Gaza, which it says was aimed at ending rocket fire from Gaza, with the killing of a Hamas military leader last week.
Five Israelis and more than 150 Palestinians subsequently died in exchanges of fire.
The Egyptian-brokered ceasefire agreement came into force at 21:00 (19:00 GMT) on Wednesday evening.
Under the deal, Israel has agreed to end all hostilities and targeted killings of militants, while all Palestinian factions will have to stop firing rockets into Israel and staging border attacks.
- Israel to end all hostilities on Gaza Strip by sea, land and air, including incursions and the targeting of individuals
- All Palestinian factions in Gaza to stop all hostilities against Israel, including rocket and border attacks
- Within 24 hours of ceasefire, talks to begin on opening crossings into Gaza and allowing free movement of people and goods
- Egypt to receive assurances from both sides that they will abide by the deal, and will follow up any reports its has been broken
Israel must also begin talks about opening Gaza's border crossings and easing restrictions on the movement of people and goods.
The BBC's Jon Donnison in Gaza City says the city was transformed overnight, as people who had spent days sheltering from air strikes and shelling flooded into the streets, some of them firing weapons into the air in celebration.
Hamas has declared Thursday a public holiday, to mark what it is describing as its victory over Israel.
In the morning, there were traffic jams on the streets, shops opened for business and queues formed at banks and cash machines. Cleaning and repair work was also being carried out on the many buildings damaged by air strikes.
"The situation is very good today, we've returned back to work as normal," 40-year-old vegetable stall owner Hani Hamadeh told Reuters news agency.
"There are lots of customers today, people are going out for the first time after eight days of war and doing their shopping."
Ashraf Diaa, a 38-year-old engineer from Gaza City, told the Associated Press: "Today is different, the morning coffee tastes different and I feel we are off to a new start."
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The BBC's Jon Donnison says Gaza is quiet after a night of celebration
But both sides have said they will retaliate if the other breaks the truce.
"If Israel complies, we are compliant. If it does not comply, our hands are on the trigger," said Hamas's exiled leader, Khaled Meshaal, at a news conference in Cairo.
Israeli media quoted Defence Minister Ehud Barak as saying that the truce was not a formal agreement but a set of understandings.
It "could last nine days or nine weeks or more but if it doesn't hold, we know what to do and of course, we will consider the possibility of resuming our activity if there is any firing or provocations", he told Israeli public radio.
In its first statement since the current flare-up began, the UN Security Council on Wednesday called on Israel and Hamas to uphold the agreement, and commended Egyptian President Mohammed Mursi and others involved in the diplomatic effort.
The BBC's Kevin Connolly in Jerusalem says that in the early stages of the ceasefire, success will be measured from minute to minute.
The more time that passes without rocket fire from Gaza or an air raid from Israel, the more confident civilians on both sides will feel, he adds.
In Israel, however, small protests were held in communities such as the southern town of Kiryat Malachi, where three people were killed by a rocket fired from Gaza during the conflict.
Protesters said the military should have hit Hamas harder and some banners denounced "agreements with terrorists".
Israel says it targeted 1,500 "terror sites" during what it termed Operation Pillar of Defence, including 30 senior militants, 980 underground rocket launchers and 140 smuggling tunnels.
The IDF said that, for the first time, militants in Gaza had fired long-range rockets, such as the Fajr-5, toward Tel Aviv and Jerusalem.
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