Two Palestinians have been killed in Gaza City after the Israeli military launched a raid deep into the Gaza Strip.
An Israeli man was also seriously injured when Palestinian fighters fired rockets at the town of Sderot during a visit by Louise Arbour, the UN high commissioner for human rights, following the incursion on Tuesday.
A Hamas fighter and a 70-year-old Palestinian woman were killed during the fighting in the Zeitoun area of Gaza City.
A total of 370 Palestinians and four Israelis have died since Israel intensified its attacks on Gaza following the capture of an Israeli soldier in a cross-border raid in June.
Speaking after the rocket attack on Sderot, Christopher Gunness, spokesman for the Office of the UN Special Co-ordinator for the Middle East Peace Process, said: "They (the rockets) landed a few hundred yards away from where we were."
Arbour arrived in Sderot after a visit to the Gaza Strip as part of a five-day tour of the Palestinian territories and Israel.
Eleven Palestinians were wounded in Israel's air strike of Tuesday, local medical and security sources said in Beit Hanoun.
There was no immediate comment from the Israeli military and no immediate information on whether the Palestinian casualties were fighters or civilians.
Israeli forces also entered the nearby Jabaliya refugee camp, as well as the northern town of Beit Lahiya.
Hospital officials named the dead fighter as Aiman Hassanein, a senior member of the governing Hamas organisation.
Witnesses said he was killed during an exchange of fire and that his brother was detained by troops.
The incursion came hours after an Israeli missile attack on a car in Gaza killed two Hamas fighters and injured five bystanders late on Monday night.
Hundreds of Palestinians gathered around two homes of Hamas and Islamic Jihad fighters after the Israeli military warned that the buildings would be destroyed in air raids, a security source said.
The source said: "They formed a human chain to prevent the two houses from being destroyed."
Hamas's armed wing hailed the success of human shields, calling it a "national duty" for Palestinians to protect the homes of fighters from Israeli air strikes.
The Israeli defence minister, Amir Peretz, said on Monday that Israel would continue its military operations in Gaza but had no intention of reoccupying the area.