|Negotiations to release Shalit, captured in a cross-border raid in 2006, have not succeeded
Tayser Abu Snima, a Hamas commander "directly and physically" involved in the capture of Israeli soldier Gilad Shalit, was killed during air strikes on the Gaza Strip on Saturday, Israel's army said.
Abu Ubaida, a spokesman for Hamas's armed wing, dismissed the claim.
"The enemy does not have the information about Shalit's capture to be able to say who among our leaders had a role in its execution," he said.
Israel has tried to free Shalit, who was captured in a cross-border raid in 2006, through a prisoner swap with Hamas, but talks have bogged down over disagreements about who Israel might free, with both sides blaming one another.
Shalit is believed to be alive and being held in the coastal enclave.
Israel also blamed Snima, killed in an air strike on a car in a Gaza town that borders Egypt, for a rare rocket strike in August that was launched from the Sinai Peninsula and hit the Israeli coastal town of Eilat and the Jordanian port of Aqaba.
Death toll in Gaza rises to 18
Snima was among five people killed on Saturday, in the third consecutive day of fighting between Israel and armed Palestinian groups in Gaza, defying the efforts of mediators to stem the violence. Another man killed was also reportedly a Hamas fighter. Hamas and other groups fired dozens of rockets and mortar rounds at Israel but did not cause any casualties.
An Israeli military statement said Gaza armed groups had fired 120 rockets and mortar rounds at Israel since Thursday, at least 50 of them on Saturday. It said eight were intercepted by a newly placed "Iron Dome" missile shield.
Hamas, the group which controls Gaza, said it alone fired 60 rockets and mortar rounds, and other armed groups said they also had a role in the attacks.
The death toll since Israel launched its retaliation for an attack on a school bus that critically wounded a teenager on Thursday climbed to 18 Palestinian fighters and civilians, including a 10-year-old boy.
There were signs of efforts to stop the bloodshed. Israel Radio said the UN Middle East envoy, Robert Serry, was trying to mediate a halt to the violence, and the Egyptian state news agency said Egypt was engaged in similar efforts.
A Palestinian official said the Arab League would discuss the fighting at a session in Cairo on Sunday.
But Abu Ubaida said Hamas would reject any ceasefire with Israel.
"There is no room to talk about calm between us," he said. "The blood of our people is very dear and cannot be in vain."
However, Ehud Barak , Israeli defence minister, in an interview with Israeli radio said that Israel will cease firing if Palestinians do likewise.
"If they stop firing on our communities, we will stop firing. If they stop firing in general, it will be quiet, it will be good," Barak said.
Meanwhile, Israeli Prime Minister Binyamin Netanyahu held a strategy session with senior officials after the Jewish sabbath on Saturday evening to weigh future steps.
Cabinet minister Gideon Sa'ar said earlier that Israel would keep responding to the attacks from Gaza, where it closely controls the entry and exit of people and goods.
"We will not permit sporadic shootings or the disruption of life inside Israel," Sa'ar told Israel Radio. "We will continue ... to implement a principle of defending our citizens."