Two Palestinians died and an Israeli soldier was wounded late Saturday in fire exchange near the border of the Gaza Strip with Israel, the Israeli army announced.
Soldiers spotted two Palestinians near the security barrier separating Israel from the Palestinian territory and opened fire, killing them after a gun battle lasting some 20 minutes, an army statement said.
"During searches at the scene, shots were fired at the force, apparently resulting in the injury of one of the soldiers," the statement added. Israeli soldiers fired back but there were no further casualties on their side.
The statement said that there had been about 100 "terror-related incidents" near the security barrier since the beginning of the year, which the army blamed on Hamas, the militant group that controls the Gaza Strip.
On the Palestinian side, witnesses told AFP they saw armed men exchange fire with Israeli soldiers before two Israeli tanks and two armoured troop carriers entered a hundred metres (yards) into the Palestinian zone.
Earlier Saturday, a rocket fired from the Gaza Strip hit southern Israel without causing casualties or damage, an Israeli military spokesman said.
Incidents along the barrier dividing Israel and the Gaza Strip have increased in recent weeks.
On Friday, two Palestinian teenagers were killed in a blast in Gaza City thought to be caused by an unexploded Israeli tank shell, medical and security sources said.
They said the shell was most likely left over from Israel's 22-day aggression on Gaza, dubbed "Operation Cast Lead", which began at the end of December 2008 and cost the lives of 1,400 Palestinians, most of them civilians, and 13 Israelis.
The latest violence comes as weeks of efforts by Washington to save the peace talks between Israel and the Palestinians appear to have failed.