Palestinians vowed to avenge the attack
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Israeli helicopter gunships have fired at suspected Palestinian militants in the northern Gaza Strip, reportedly wounding several people.
The army said it fired at militants who had planted explosives near Israeli troops in the town of Beit Hanoun.
Palestinian witnesses said 11 people were injured in two missile strikes.
Meanwhile, a nine-year-old Palestinian boy was shot dead in the southern Gaza town of Rafah during an Israeli raid, Palestinian witnesses said.
The Israeli army has not confirmed the death.
Earlier on Thursday, Israeli troops raided the normally quiet town of Jericho in the West Bank, seizing arms and arresting more than 20 people.
Gaza clashes
The Israeli army said at least one missile had been fired at a group of militants in Beit Hanoun, where a big military operation is under way to stop Palestinian rocket attacks on Israel.
A rocket attack earlier this week killed two people in a nearby Israeli town.
Palestinian witnesses confirmed that militants had been operating in the area, saying the Israeli army fired two missiles.
The witnesses also said youths had been throwing stones at Israeli troops.
In a separate incident, a spokesman for the militant group Hamas said one of its members was killed in exchanges of fire with Israeli troops around Jabalya, near Beit Hanoun.
In Rafah, nine-year-old Omar Mohammed Abu Zreihan was killed when Israeli tanks fired toward houses in the area, witnesses and hospital officials said.
'Dangerous escalation'
In Jericho, witnesses said Israeli tanks and armoured personnel carriers moved in as helicopter gunships hovered overhead.
"We have arrested more than 20 wanted men so far, among them senior people, and found weaponry that includes rifles and grenades," an Israeli military spokeswoman said.
Palestinian security sources said three of those arrested had been injured.
They also said that the house of a wanted man from Palestinian leader Yasser Arafat's Fatah organisation was blown up.
The ancient town of Jericho has been one of the more peaceful areas of the West Bank, largely untouched by the violence of the last three-and-a-half years.
Palestinian cabinet minister Saeb Erekat described the operation in the town as "a dangerous escalation by Israel".
In the northern West Bank city of Nablus residents said Israeli troops were searching houses for militants.