Israel targeted a house in a known militant stronghold in Gaza
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Six children have been hurt by a rocket fired by Palestinian militants at a Jewish settlement in Gaza.
The missile hit a building in Neve Dekalim, emergency workers and military sources said.
Earlier, two Palestinians were hurt in an Israeli missile strike in Gaza City, while clashes erupted after troops pushed into the town of Beit Hanoun.
Thousands of Israelis meanwhile formed a human chain from Gaza to Jerusalem to protest at plans to pull out next year.
Evacuated
The Israeli army said at least one missile hit the building in the main Gush Katif settlement bloc.
"As far as we know, all six of the victims are children," an army source told AFP news agency.
"They have all been evacuated to hospital and one of them is in a moderate condition."
Earlier, Israeli helicopters fired missiles at a house in Gaza City's eastern Zeitoun district, an area known as a militant stronghold that has often been targeted by Israel.
One of the missiles failed to explode, but the second caused a huge blast that set the two-storey building on fire. Two people were injured and several houses nearby were damaged.
Missiles were fired at the same building later in the day, reducing it to rubble. Palestinian sources said the house belonged to a man linked to militant group Hamas.
Palestinian security sources said the house was empty at the time of the strikes.
Overnight, Israeli troops moved into the centre of Beit Hanoun as part of an operation to stop rocket attacks against Israel.
The Israeli offensive began on 29 June after two Israelis were killed by a rocket launched from the town.
On Sunday evening, tens of thousands of Israelis formed a 90km (56-mile) human chain from Gaza to Jerusalem in protest at the government's plans to withdraw from Gaza.
Mr Sharon wants to pull Israeli troops and settlers out of the Gaza Strip and parts of the West Bank by the end of 2005.