Medics said missiles hit the front of a house in the town of Rafah early on Saturday

A 16-year-old girl, Kifah Natour, and her brother Amar, 15, were killed by the blast, according to Dr Ali Musa, the director of the local hospital.

Two children were among five civilians wounded in the attack.

The strikes came as Israeli troops moved closer to a refugee camp in the Rafah area.

An Israeli army spokesman denied the attack, saying the only strikes the military had carried out in Gaza close to the time of the attack took place about 2km away from Rafah, in which two groups of Palestinian fighters were targeted.

Ground incursion

 

Another Israeli air strike in Rafah killed a fighter from the Islamic Jihad group, Palestinian medics said. The Israeli army confirmed the second attack.

Israeli forces moved into the Rafah area on Thursday to destroy what the army called "terrorist infrastructure" as part of a wider offensive against fighters, launched after Israeli soldier Gilad Shalit was seized in a cross-border raid on June 25.

 

The kidnapping of Shalit sparked a fierce Israeli offensive in the Palestinian territory which has killed at least 162 people.

 

In public Israel has rejected the Palestinian demands for a prisoner exchange but on Friday the Lebanese Arabic daily Al-Nahar reported that Egypt was mediating a deal between the two sides.

 

Al-Nahar said the Israeli soldier might be released in return for freeing Palestinian detainees in Israeli jails.

Further deaths

 

"Israel has accepted the principle of a prisoner exchange," Al-Nahar quoted a member of Hamas' politburo in Damascus, Mohammed Nazal, as saying.

 

"The groups that kidnapped the Israeli soldier are asking that 1,000 Arab and Palestinian prisoners be released but differences remain as to this number and the names [of the inmates]," Nazal said.


Medics and witnesses said two Palestinian men were killed and another was wounded when a tank shell landed near a house in Rafah shortly after daybreak on Friday.

 

A Hamas fighter was also killed on Friday in a separate Israeli air raid, medics said.
   

Troops backed by armoured vehicles have since taken over a 3-5 km area, carried out house-to-house searches and destroyed greenhouses and chicken farms.

 

Twelve people have been detained in the incursion since Thursday.