At least eight Palestinians have been killed and 37 wounded after Israeli tanks shelled a town in the Gaza Strip. Israel says it returned fire after its troops came under attack from Palestinian rocket propelled grenades and machine guns.
Residents in Rafah in the southern Gaza Strip say that at least five tank shells hit a school and several houses.
The Israeli army says its troops were firing at Palestinians who had shot at an army outpost close to the Israeli-Egyptian border.
The fighting apparently started after Israeli troops began erecting a new military watchtower and an embankment near Rafah to protect their soldiers.
The Israelis say some Palestinians threw stones and bottles, while others fired on the troops.
Palestinian witnesses say the Israeli soldiers responded with tank shells and machine guns.
Doctor Ali Musa, head of Rafah Hospital, said two women and a girl were among those who died Thursday.
Israeli troops and Palestinians frequently clash in Rafah, a militant stronghold.
At least six Palestinians, most of them children, were reported killed in Israeli incursions into Rafah last week.
Palestinians also smuggle weapons into Rafah from tunnels that go under the border with Egypt.
An Israeli army spokesman blamed Thursday's killings on what he called Palestinian terrorists, who he said operate out of civilian areas and put the lives of residents at risk.
Meanwhile, Israelis marked the seventh anniversary of the assassination of Prime Minister Yitzhak Rabin.
He was gunned down on November 4, 1995 by a Jewish extremist but the anniversary fell Thursday, according to the Jewish calendar.
Israel's president, Moshe Katzav, was among those who spoke at a memorial ceremony in Jerusalem. He called on Israelis to learn from history and help ensure that such a terrible event would never happen again.