A massive explosion at an Israeli army outpost in the Gaza Strip has killed one soldier and injured five others.
The blast did not hit areas where many soldiers may have been
Israeli army sources said Palestinian militants dug a tunnel and set off the blast from beneath the base.
Israeli helicopters later fired missiles at two metal workshops in the Zeitoun area of Gaza City, but no serious injuries were reported.
In another development, a Palestinian rocket attack in southern Israel has left two civilians dead.
Several others were injured in the town of Sderot after at least two rockets launched from the nearby Gaza Strip landed near a kindergarten.
Soon after the attack on the military outpost at the Gush Katif junction - near Israeli settlements - a Palestinian police officer and a teenager were killed by Israeli gunfire near the nearby Khan Yunis refugee camp.
The Israeli army said there was heavy Palestinian gunfire from the camp and that troops fired back.
Initial reports had spoken of up to 30 Israelis injured in the blast at the heavily-fortified army outpost, prompting hundreds of Palestinians to celebrate on the streets of Gaza City.
Hamas 'dug tunnel'
Palestinian militant groups Hamas and the Al-Aqsa Martyrs' Brigades both separately claimed responsibility for the attack, saying they were avenging the deaths of leaders and activists killed by Israel, including seven militants shot dead in the West Bank over the weekend.
The explosion at the army base went off at shortly before 2200 (1900 GMT) on Sunday, bringing down a building.
Hamas told journalists that its military wing dug a 350m tunnel under the outpost and then packed it with hundreds of kilograms of explosives.
The militant group said its forces waited until there was a shift change in the tower and then set off the explosives when there was the maximum number of soldiers inside.
Israel was braced for huge numbers of casualties, but the commander of the base said the blast did not hit sleeping or resting areas where large numbers of troops might have been congregated.
Earlier on Sunday, Palestinian militants vowed to avenge the killings on Saturday of seven Palestinian militants in the West Bank city of Nablus.
Among the dead were the West Bank leader of al-Aqsa Martyrs' Brigade and top figures in Hamas and Islamic Jihad.
Tens of thousands of mourners attended the funerals.