The attack early on Sunday came hours after eight Palestinians were killed by Israeli fire, overshadowing the swearing-in of Mahmud Abbas as the new Palestinian leader.

An Israeli military spokesman confirmed the attack, saying it had been aimed at a building in Bait Lahya in the north of Gaza City used as a workshop for making rockets and mortar shells.

The raid came after 20-year-old Abdel Rauf Abu Namus from the Islamic Jihad was killed by Israeli troops late on Saturday.

Violence

Earlier, five died and seven were injured in an Israeli incursion into the Zaitun neighbourhood of Gaza City, Palestinian medics said.

Israeli sources meanwhile claimed two children were wounded in the settlement of Netzarim when a mortar landed in a synagogue.

The latest violence followed Abbas' inaugural address during the day, condemning the violence – whether from Israel or the Palestinian fighters.

"We are seeking a mutual ceasefire to end this vicious circle," Abbas told MPs in a speech marking his inauguration.