By Alexander Cornwell, Parisa Hafezi and Jeff Mason TEL AVIV/DUBAI/WASHINGTON (Reuters) -Iranian missiles struck Israel's Tel Aviv and the port city of Haifa in an early morning raid on Monday, destroying homes and fuelling concerns among world leaders at this week's G7 meeting that the battle between the two old enemies could lead to a broader regional conflict.

At least three people were killed and scores were wounded during an aerial battle over Tel Aviv, as Iranian missiles rained down and Israeli rockets attempted to intercept them.

The latest salvo comes after a weekend of escalating tit-for-tat attacks between Israel and Iran that raised fears of a wider, more dangerous regional war.