Palestinian medical officials say two Palestinians have been killed in an Israeli military attack in the Gaza Strip.
The Israeli military says it fired on militants who shot rockets into southern Israel. The identities of those killed were not immediately available.
In the West Bank Wednesday, at least one Israeli was wounded when Palestinian gunmen opened fire outside the Jewish settlement of Ariel.
In separate developments, Israeli officials say they are preparing a plan to cut power supplies to the Gaza Strip in response to continuing cross-border rocket fire by Palestinian militants.
Israeli Deputy Defense Minister Matan Vilnai told the country's Army Radio that authorities want to dramatically reduce the flow of electricity from Israel over several weeks. He said the proposal calls for Israel to start disconnecting power gradually without causing harm to hospitals and sparking a humanitarian crisis.
Officials are expected to present the plan to Defense Minister Ehud Barak Thursday. Palestinian officials have condemned the plan as a violation of international law.
Israel declared the Gaza Strip an "enemy entity" in September, opening the way for cuts in vital supplies to the Palestinian territory controlled by the militant Islamic group Hamas.
Israel withdrew its troops and settlers from the coastal territory in 2005 after 38 years of occupation. But it controls Gaza's borders, air space and coastal waters, leaving the Palestinian territory dependent on the Jewish state for utilities and imports of humanitarian aid.
Elsewhere, an Egyptian security official says Egyptian police uncovered 500 kilograms of explosives that were hidden in plastic bags near the border with Gaza. The official says police believe the explosives were to be smuggled into Gaza. Israel has accused Egypt of not doing enough to stop smuggling from Egypt into Gaza.
Some information for this report was provided by AFP, AP and Reuters.