Israeli soldiers killed at least nine Palestinians during gun battles that erupted when tanks raided the edge of Gaza City on Wednesday.
An Israeli military spokesman said the incident began when troops guarding the Jewish settlement of Netzarim saw a group of armed men approaching.
According to Palestinian witnesses the troops, who were in armored vehicles, initially came under rocket propelled grenade fire. Two Palestinians were reported killed when the troops returned fire with the machine guns mounted on the vehicles.
The troops then entered the nearby Gaza City neighborhood of Zaitoun where they met fierce resistance from Palestinians who opened fire on them with automatic rifles and more rocket propelled grenades. Witnesses said gunmen swarmed through the neighborhood attacking the Israeli vehicles as they moved through the narrow streets.
The Israeli spokesman acknowledged there were heavy exchanges of fire but said the raid was a limited measure and that only one tank and one bulldozer had engaged the gunmen.
Netzarim is located just outside the southern edge of Gaza City and has been the scene of frequent violent clashes between Israeli troops and Palestinian militants in the more than three years of the Palestinian uprising.
It was the deadliest incident in Gaza in a month. The Palestinian militant group Islamic Jihad says it lost five of its members in the clash and vowed to avenge their deaths. Mohammed al Hindi, an Islamic Jihad leader said, "The bloody message has been received...and the Palestinian people will know how to respond to it."
Meanwhile, Israeli jets fly at supersonic speed over the southern Lebanese city of Tyre on Wednesday a day before a planned prisoner exchange between Israel and the Lebanese guerrilla group Hezbollah.