Palestinian militants have fired rocket barrages that wounded an Israeli baby, and Israel retaliated with air strikes which killed two Gaza fighters.
The new round of violence began last Thursday when gunmen, apparently from Gaza, crossed the border from Egypt and ambushed cars and buses in southern Israel, killing eight people. That was followed by massive Palestinian rocket attacks and retaliatory Israeli airstrikes.
Gaza health ministry spokesman Adham Abu Salmia said a member of the Islamic Jihad group was killed in Israeli air strikes on Wednesday evening. The Israeli military said "aircraft targeted a terrorist squad that fired rockets into Israel".
Israeli aircraft killed another Islamic Jihad fighter before dawn on Wednesday, Hamas security officials said. The Israeli military said the dead man had smuggled weapons into Gaza and was involved in militant activity in Egypt's Sinai peninsula, near Israel's southern border.
Palestinians fired more than a dozen rockets into Israel, sending residents in Ashkelon and elsewhere in the south running for cover. A baby was injured by shrapnel from one of the Palestinian rockets, Israel's rescue service said.
Israeli media reported that security forces sent reinforcements to the area. A music festival which was to be held in the southern city of Ashkelon was cancelled, conforming with military recommendations against large gatherings in tense security times, the military said.
Also on Wednesday, Israeli defence officials said Israel gave Egypt the results of an initial military probe into the deaths of Egyptian police officers during fights between Israeli soldiers and militants on Thursday.
Egypt threatened to recall its ambassador while in Cairo, and protesters surrounded the Israeli Embassy on Saturday and tore down the Israeli flag, replacing it with an Egyptian one.
The officials said video filmed from a helicopter during the fighting shows soldiers did not shoot towards locations near the Egyptian positions even after they came under attack from missile attacks and sniper fire from militants there.
The head of Israel's southern command is heard in military radio transmissions ordering soldiers not to shoot in the Egyptian's direction, the officials said. Three militants killed were Egyptian, including one that had escaped from an Egyptian jail during the chaos surrounding the recent ousting of long-time Egyptian leader Hosni Mubarak, they said.