Up to six Palestinians have been killed and about 20 wounded in an attack on the main crossing point between the Gaza Strip and Israel.
Security is tight at the Erez border crossing
Palestinian witnesses say two jeeps disguised as Israeli military vehicles drove up to Erez crossing point.
One exploded near a Palestinian checkpoint, killing the driver and two Palestinian police. The other reached the Israeli position before exploding.
Details are confused, but the attack was claimed jointly by three groups.
At least 19 people - including 12 policemen - were injured in the explosion at the Palestinian check point.
An Israeli army spokesman described the blast as a suicide bomb that went off prematurely.
It is unclear whether the Palestinian policemen - who died along with the driver - were killed by the explosion or by gunfire.
The Israeli army says the other jeep approached one of their positions and a gunman got out and started shooting.
Israeli troops returned fire and killed him.
Some reports say there were two other gunman in the jeep who died in the gun battle.
There were no Israeli casualties.
A taxi driver at the scene, Ali al-Basyouni, said: "The sound of the explosion was huge and powerful, followed by intense machine gun fire from the Israeli army outpost."
Militants admit attack
The militant groups Hamas, Islamic Jihad, and the al-Aqsa Martyrs Brigades, say they carried out the attack, calling it a joint "self-sacrifice operation" in a message posted on the Hamas website.
Earlier on Saturday, a Palestinian policeman was shot dead by an Israeli patrol in the West Bank town of Tulkarm.
The Palestinians say he was returning home unarmed, whereas the Israeli army said one of its patrols had opened fire on a group of men, one of whom was carrying a pistol.
Israel has tightened security along its borders with Gaza and the West Bank during the Purim festival, which ends on Monday.
The Erez industrial zone is one of the few places in Gaza where there is co-operation between Israelis and Palestinians,
About 6,000 Palestinians work in factories there producing plastics, textiles, iron, electronics.
It has recently been the target of attacks by Palestinian militant groups.
The most recent was on 26 Feb, when two
Palestinian gunmen killed an Israeli soldier there before being shot dead.