Germany on Monday demanded Israel "clarify every incident" involving the U.N. peacekeeping mission in Lebanon and urged it to investigate the destruction of a UNIFIL observation tower.

U.N. peacekeepers on Sunday said an Israeli "army bulldozer deliberately demolished" an observation tower and fence of a U.N. position in southern Lebanon, where the army is fighting Hezbollah.

Hezbollah said it repeatedly targeted Israeli troops in south Lebanon border villages over several hours on Monday, saying at least one of the attacks caused "certain casualties".

Hezbollah fighters targeted "a gathering of Israeli enemy soldiers on the eastern outskirts of the village of Markaba" with three separate rocket salvos, it said, adding one of the attacks caused "certain casualties" and that its fighters also targeted Israeli troops attempting "to evacuate the dead and wounded".

Lebanese were surveying the damage on Monday after overnight Israeli strikes hit nearly a dozen branches of a Hezbollah-run financial institution that Israel says is used to fund attacks but where many ordinary people keep their savings.

The strikes targeted Al-Qard Al-Hassan branches in the southern neighborhoods of Beirut, across southern Lebanon and in the Bekaa, where Hezbollah has a strong presence. One strike flattened a nine-story building with a branch inside it. Smoke was still rising from several locations on Monday and bulldozers were removing the debris.

Caretaker Prime Minister Najib Mikati has stressed that the only solution to the current conflict is “diplomacy.”

The Israeli military has apologized for a strike in southern Lebanon that killed three Lebanese soldiers.

The military said it struck a truck on Sunday that had entered an area where it had previously targeted a Hezbollah truck transporting a launcher and missiles.

Iran denied Monday an accusation from Lebanese Prime Minister Najib Mikati that it was interfering in Beirut's internal affairs over remarks attributed to Tehran's speaker of parliament.

"Iran has never had any intention or (taken any) action that could be suspected of interfering in the internal affairs of Lebanon," said Iran's foreign ministry spokesman Esmail Baghaei during a weekly news conference.

With Iran-backed Hezbollah on the defensive after a series of heavy Israeli blows, the United States and Iran are locked in a showdown over Lebanon's future, analysts said.

Hezbollah, the most powerful regional force backed by Iran, which arms and finances it, has long held sway in Lebanon.

Just a month ago, Dahieh's bustling streets were packed with traffic, families strolling about and youths in cafes, but now silence dominates the abandoned Hezbollah bastion, interrupted only by the sound of Israeli bombs.

Escalating Israeli attacks since late September, after nearly a year of low-intensity cross-border exchanges, have reduced much of the Lebanese capital's once densely-packed southern suburbs to rubble and sent many of its residents fleeing.

U.N. peacekeepers in Lebanon said the Israeli army "deliberately" damaged one of their positions in southern Lebanon, in the latest incident reported by the force that remains deployed in all positions.

An Israeli "army bulldozer deliberately demolished an observation tower and perimeter fence of a U.N. position in" southern Lebanon, UNIFIL said in a statement, adding that its forces remain in all positions "despite the pressure being exerted."

Lebanese state media has accused Israel of planting explosives and detonating buildings on a wide-scale in three border villages, as all-out war between Israel and Hezbollah neared its one-month mark.

"The Israeli occupation army is carrying out a large-scale bombing operation in buildings in the towns" of Adaisseh, Markaba and Rab Tlatine, the National News Agency reported after Israel's Defense Minister said Israel was "destroying" Hezbollah in south Lebanon.