Palestinian health officials said on Wednesday that two of the victims were a pregnant woman and her 18-month old child as the Israeli army claimed it bombed Hamas military targets in the enclave in response to rocket fires. The Iron Dome aerial defense system intercepted 11 launches, the majority of the rockets hit open areas.
Smoke plumes rising following an Israeli air strike on Gaza City tonight.
The IDF said: "Terrorists shot at civilian vehicles that were being used in the effort to construct the barrier around the security fence in the northern Gaza Strip".
Following the strike, Hamas' Izzedine Al-Qassam Brigades announced that two of its members were killed in the strike, naming them as Ahmad Margan and Abdel Hafex Al-Silawi, both 23-years-old and from the Jabalia refugee camp.
Eight rockets were fired from Gaza and four fell into Sderot settlement.
Air raid sirens sounded nearly nonstop in southern Israel from sundown on Wednesday, warning residents to stay in shelters as more than 80 rockets were fired in their direction.
"The Israeli strike was conducted in response to the rockets launched from the Gaza Strip at Israeli territory over the course of the evening and night", it said.
The nearly daily airborne arson attacks have been part of months of weekly border protests led by the Islamic militant group Hamas that rules Gaza aimed in part at drawing attention to the Israeli-Egyptian blockade imposed after it took control of the territory in 2007.
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The Palestinians and the United Nations similarly dispute Israel's assertion that it ended its occupation of Gaza in 2005. Senior PLO official Ahmed Majdalani said any agreement with Israel should not be limited to "Hamas".
There were no immediate reports of fresh Israeli injuries or damage.
Parts of the town have been closed off and police bomb disposal units were at the scene of the strikes, a spokesman for the force said.
A truce between Hamas and Israel will be officially unveiled by the end of August, according to Turkey's official news agency Anadolu, quoting a Hamas source.
After Israel responded with tank fire, dozens of rockets were sent toward Israeli territory on Wednesday night.
Hamas warned Israel - with which it has fought three wars since 2008 - it would pay for the attack.
The cross-border violence comes soon after a delegation of senior Hamas officials visited Gaza to discuss a ceasefire agreement with Israel proposed by Egypt and the UN.
One Israeli soldier has been shot dead by a Palestinian sniper during the same period, while incendiary devices attached to balloons and kites launched by Palestinians have sparked hundreds of fires in southern Israel, burning some 3,000 hectares (7,400 acres) of forest and farmland.
The source, speaking on condition of anonymity, said that as part of the deal, which was brokered by Egypt and the United Nations with input from Turkey and Qatar, Hamas and Israel would initially observe a two-week trial cease-fire.