Palestinian masked militants of al-Aqsa Martyrs' Brigades patrol as they secure area around one of their offices, Tuesday

At least nine Palestinians have been wounded in a second day of clashes in the Gaza Strip between gunmen of the rival Hamas and Fatah groups.

Witnesses and medics say at least four schoolchildren were among the wounded in the pre-dawn gunbattle in Gaza City. Three gunmen were killed Monday in a firefight near the town of Khan Younis, in southern Gaza.

The rival factions gave conflicting versions of what triggered the clashes.

Speaking in Gaza, Hamas-led Palestinian Authority Prime Minister Ismail Haniyeh called on factional leaders to put an end to, what he described as, "sad events."

President Mahmoud Abbas - who heads the Fatah faction - also called for restraint. He told reporters in the West Bank the real battle is against the international "economic siege" of the Palestinians.

Western donor nations have cut off aid to the Hamas-led Palestinian government over the group's refusal to renounce violence and recognize Israel.

Monday, the World Bank issued a report saying the financial situation in the Palestinian territories is worse than anticipated and it is threatening to provoke a humanitarian crisis.

Diplomats from the United States, Russia, the European Union and the United Nations are to meet in New York Tuesday, to discuss the situation and strategies for reviving the stalled Mideast peace process.

The violence in the Gaza Strip between the rival factions is believed to be at its worst since the militant Islamic group took over the Palestinian government from Fatah, after winning elections in January.