US-backed peace talks between Israel and the Palestinians have stalled [AFP]

Two Palestinians have been killed and an Israeli soldier wounded in an exchange of gunfire near the border of the Gaza Strip with Israel.

The Israeli army said in a statement that the two Palestinians died after a 20-minute gun battle on Saturday near the security barrier separating Israel from the Palestinian territory.

"Soldiers identified two suspects near the security fence in the central Gaza Strip. The force fired towards the suspects, and they were killed as a result.

"During searches at the scene, shots were fired at the force, apparently resulting in the injury of one of the soldiers," the statement said.

Exchange of fire

The wounded soldier was taken by helicopter to a hospital in the southern city of Beersheba. The statement said he had suffered moderate wounds.

On the Palestinian side, witnesses told the AFP news agency that they saw armed men exchange fire with Israeli soldiers before two Israeli tanks and two armoured troop carriers entered 100 metres into the Palestinian zone.

Earlier on Saturday, a rocket fired from the Gaza Strip hit southern Israel without causing casualties or damage, an Israeli military spokesman said.

The latest violence comes as weeks of efforts by Washington to save the peace talks between Israel and the Palestinians appear to have failed.

The United States was unable to persuade Israel to renew a freeze on building Jewish settlements in the West Bank.

Barack Obama, the US president, presided over the relaunch of direct talks in Washington in September, only to see them stall within weeks when a settlement moratorium expired and the Palestinians refused to return to the table.

Source: Agencies