4 Palestinians, including 2 Hamas militants, killed by Israeli fire after gunshots from the Gaza Strip

Four Palestinians, including two Hamas militants, were killed in an Israeli airstrike and protests Friday as gunshots from the Gaza Strip wounded two Israeli soldiers, officials said, in a new flare-up that shattered a month-long easing of hostilities that was mediated by Egypt.

The calm along the Gaza-Israel frontier was in exchange for Israel's scaling back restrictions on the territory. However, Gaza's Hamas rulers accused Israel of not honouring the deal.

Leaders from the Islamic militant group were in Egypt on Friday for further talks. Cairo has hoped negotiations could lead to a long-term ceasefire.

The Israeli army said the soldiers who were shot were moderately and lightly wounded, respectively. Israeli aircraft hit a Hamas militant site in response, killing two Hamas gunmen and wounding three others, Gaza's health ministry and Hamas' armed wing said.

The escalation in violence came as thousands of Palestinians demonstrated along Gaza's perimeter fence with Israel on Friday.

The Israeli military said some 5,200 Palestinians had amassed along the frontier, but did not immediately provide further comment.

The health ministry said a 19-year-old Palestinian protester died shortly after he was injured in southern Gaza Strip. Early Saturday, the ministry added that second demonstrator aged 31 had succumbed to his wounds.

More than 50 Palestinians suffered various injuries during protests at several sections of the frontier.

Three wars in 10 years

The protesters are demanding an end to a blockade imposed by Israel and Egypt. They also want Palestinians to have the right to return to land from which their families fled or were forced to flee during Israel's founding in 1948, which Israel rejects.

Some twomillion Palestinians live in Gaza, whose economy has suffered years of blockades as well as recent foreign aid cuts. Unemployment stands at 52 per cent, according to the World Bank.

Israel says its blockade is necessary to stop weapons reaching Hamas, which has fought three wars with Israel in the past decade.

Hamas has hoped that Egyptian mediators could alleviate the blockade that Israel and Egypt imposed after it violently seized full control of Gaza in 2007 from the Western-backed Palestinian Authority.

More than 200 Palestinians and an Israeli soldier have been killed in the border protests that Hamas has led since March last year.

Last month, Israel allowed Gaza fishermen to sail up to 15 nautical miles off the enclave's coast, but retracted the decision this week, scaling it down to the longtime previous limit of nine miles after rockets were fired from Gaza.

Hamas also says Israel delayed the transfer of Qatari money for cash-strapped public institutions in the territory of twomillion people and did not take more measures to ease the grinding power shortage in Gaza.

Egyptians work to prevent new escalation

Egyptian mediators, credited with brokering a ceasefire after a Hamas rocket attack north of Tel Aviv in March that set off a burst of intense fighting, have been working to prevent a new escalation.

Cairo's mediation had helped persuade Israel to lift some restrictions on the movement of goods and people in and out of Gaza and expand the Mediterranean zone where Gazans can fish.

But Israel scaled back the zone this week in response to rocket fire from Gaza, a spokesperson for its military liaison agency with the Palestinians said.

Hamas said in a statement on Thursday that its Gaza chief, Yeyha Al-Sinwar, had traveled to Cairo for talks on efforts to maintain calm along the border and alleviate Palestinian suffering.