The United Nations' relief agency in the Palestinian territories say nearly 40 Palestinian homes have been destroyed in an Israeli military operation. Eleven Palestinians were reported killed in the action, at a refugee camp in the southern Gaza Strip.

Israel launched the 36-hour Khan Younis operation Friday. It followed several days of rocket and mortar attacks by militants targeting Jewish settlements. One Israeli was reported killed and about 15 others wounded in the rocket attacks.

The U.N. agency said it would release a full report on the demolitions later Sunday.

The agency has repeatedly criticized the Israeli policy of destroying homes allegedly used as rocket launch pads

In other developments, Israel has agreed to free 170 Palestinian prisoners, as part of a deal reached last week with Egypt.

Israeli Prime Minister Ariel Sharon promised the release after Egyptian President Hosni Mubarak ordered the release of an Israeli jailed in Egypt on spy charges.

Some information for this report provided by AP and Reuters.