Six Palestinians were killed and 32 injured by Israeli strikes on Gaza after militants fired on an Israeli jeep, wounding four soldiers, medics and witnesses said on Sunday.
The flare-up, which began on Saturday, was one of the most serious since Israel's devastating 22-day operation in the Gaza Strip over New Year 2009.
In the latest in a spate of attacks and counter-attacks between the army and Palestinians, a militant was killed and two other people wounded in an Israeli air strike near the northern Gaza town of Jabaliya overnight, medics said.
The dead man was named as Mohammed Shwikani, a 20-year-old militant with the armed wing of Islamic Jihad, the group said.
Early on Sunday, medics reported finding the body of another Islamic Jihad militant, 20-year-old Mohammed Abed, who was killed in another air strike east of Jabaliya, raising the death toll to six over 12 hours of bloodshed.
The Israeli military said it had attacked seven different targets overnight, including arms dumps, a weapons-making facility and two rocket-launching sites "in response to recent events."
The army said at least 36 rockets fired from Gaza had landed in Israel during the flare-up, with a new barrage on Sunday morning injuring four people in the Israeli town of Sderot, several kilometres from the border.
The violence erupted Saturday evening when militants fired an anti-tank missile at an Israeli jeep near the Karni crossing along the border east of Gaza City.
The army confirmed four soldiers were wounded in the attack, which was claimed by the armed wing of the left-leaning Popular Front for the Liberation of Palestine (PFLP).
Military sources said two of the soldiers were in serious condition.
In response, Israel fired a barrage of artillery fire and shells, killing four people and wounding 32, according to Ashraf al-Qudra, spokesman for the Hamas-run health ministry.
Medics said 10 of the injured were in "serious to critical condition" and Qudra said 10 of those wounded had undergone amputations.
He named the four civilians killed as 20-year-old Matar Abul Ata, 17-year-old Mohamed Harara, 15-year-old Ahmed Harara and 18-year-old Ahmed Dardasawy.
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The violence prompted authorities on both sides of the border to close some schools.
-- Threats of revenge --
Late Saturday, Israeli Prime Minister Benjamin Netanyahu held talks with his Defence Minister Ehud Barak and Chief of Staff Lieutenant General Benny Gantz to discuss the situation in the south, the premier said on Twitter.
"The IDF (Israeli Defence Forces) responded severely to the incident and additional responses will be examined in the coming days," Barak was quoted as saying in a statement from his office.
The bloodshed was swiftly condemned by the Hamas government, as well as by militant groups, which vowed revenge.
"The occupation attacked Palestinian civilians east of Gaza City and Khan Yunis. We consider this escalation as very dangerous. It must stop immediately," said Hamas spokesman Fawzi Barhum.
The armed wing of the radical Popular Resistance Committees also released a statement vowing that "the Zionist enemy will pay a high price for this crime against Gaza".
And Islamic Jihad warned that "every aggression against the Palestinian people will be followed by a response from the resistance."
Tensions have been rising between Israeli troops and Gaza militants.
On Thursday, an Israeli soldier was wounded near the border when explosives packed into a tunnel were detonated in an attack claimed by Hamas's armed wing, the Ezzedine al-Qassam Brigades.
Several hours earlier, a 13-year-old Palestinian was shot dead by gunfire from an Israeli helicopter in the same area, medics and witnesses said.
And on Tuesday, three Israeli soldiers were wounded in an another explosion in the same area.
An earlier flare-up in and around Gaza began on October 22 and continued for three days, with eight militants killed in Israeli air strikes, and armed groups firing more than 100 rockets across the border, severely wounding two Thais.
In December 2008, just six weeks shy of general elections, Israel launched a huge operation in Gaza to stamp out Palestinian cross-border rocket fire that cost the lives of 1,400 Palestinians -- half of them civilians -- and 13 Israelis, 10 of them soldiers.