Israeli helicopter raids on Rafah continued late into Thursday night, Aljazeera's correspondent reported.
At least seven Palestinians were killed and seven others wounded in a missile strike launched from Israeli helicopter gunships earlier on Thursday.
Two missiles were fired in that attack, Rafah hospital director Ali Mussa, told AFP.
The attacks follow an ambush on an Israeli armoured vehicle by Palestinian resistance fighters, which left five Israeli soldiers dead in Rafah on Wednesday.
The deaths bring to 19 the number of Palestinians killed since Wednesday.
Israeli occupation forces continued to suffer a high number of fatalities in the third day of increased fighting between Israeli troops and Palestinian resistance fighters.
Israeli occupation forces on a raid into Rafah were ambushed when their armoured vehicle was blown up. Five Israeli soldiers were killed.
The Palestinian resistance group, Islamic Jihad, claimed responsibility for the ambush, saying it was to avenge the killings of some of its leaders as well as the assassination of Hamas founder, Shaikh Ahmad Yasin.
Islamic Jihad fighters said they used an anti-tank rocket and a large bomb laid in the armoured vehicle's path to destroy it.
In a similar incident on Tuesday, six other Israeli soldiers were killed when their armoured vehicle was destroyed.
Remains handed over
Palestinians hold a piece of a
blown-up Israeli military vehicle
Israeli soldiers were reported to be pulling out of al-Zaitun after a deal with Palestinian
resistance groups for the return of the remains of six Israeli soldiers killed in Gaza was reached on Thursday.
Palestinian fighters later said they had handed over the remains of the Israeli soldiers to Egyptian mediators.
A masked spokesman for al-Aqsa Brigades read out a statement, saying "we have delivered the body parts to the Egyptian intelligence service in the presence of an official from the Palestinian Authority."
Palestinian medics discovered the bodies of four dead Palestinians in the rubble of two buildings blown up by Israeli forces early on Thursday as the withdrawal began.
Israel had earlier insisted its troops would stay put until the bodies were recovered for a proper burial according to Jewish tradition.
The two successive ambushes prompted Israeli opposition politicians to renew their calls for abandoning Gaza, where armed forces are bogged down guarding 7500 settlers ringed by 1.2 million Palestinians.
Six Israeli soldiers died when their
armoured vehicle was blown up
"To remain in Gaza will be tragic. Another Lebanon situation is arising there. I hope this will push our leaders to pull us out," said Yossi Sarid, head of the left-wing Meretz party.
The human tragedy of the occupation was at view in the morgue of Gaza's Shifa hospital.
On a bloody table at the morgue lay strewn remains of a Palestinian fighter torn apart in an Israeli air strike.
"There are four bodies here, all martyrs," said Abu Ahmad, a morgue worker.
Inside the morgue, the grief for 13 Palestinians killed in two days of fighting was palpable but unspoken.
While tending the dead, Abu Ahmad nurtures his own death wish.
"I wish I could die a martyr," he said. "The smell of martyrdom is sweet."