Two Palestinians dead in Gaza blast: officials

"Two people were killed and another injured in an explosion of unknown origin, health ministry spokesman Ashraf al-Qudra told AFP.

An interior ministry statement said both the dead men were policemen and that Gaza security forces had launched an investigation.

The Israeli military said it had not carried out an air strike, and Palestinian eyewitnesses at the scene told AFP they had seen no aircraft overhead.

An AFP journalist witnessed damage to neighbouring houses and blood on the road.

Earlier on Tuesday, Israel launched an air strike against Gaza's Hamas rulers after militants in the strip fired a mortar round across the border, the army said.

Witnesses in the coastal enclave told AFP that fire from an Israeli drone hit Hamas facilities east of Al-Bureij refugee camp.

No injuries were reported.

"A mortar shell was identified as having been fired from the Gaza Strip into Israeli territory," an Israeli army statement said in English.

"In response, an Israel Defence Forces aircraft targeted a Hamas military post in the northern Gaza Strip."

Israeli media said the shell fell on open ground, causing no injuries or damage.

Tuesday's events were the latest in a string of cross-border incidents which have raised concerns of further escalation before Israel's September 17 elections.

On Monday, Israeli warplanes hit what the military said were "terror targets in a Hamas military compound in the northern Gaza Strip, including the office of a Hamas battalion commander."

Israel also announced it was slashing by half the fuel it pipes to the strip's main power station, meaning a cut to Gaza's already meagre electricity supply. 

The measures came after three rockets were fired from Gaza into southern Israel on Sunday night, according to the army, which said two of them were intercepted by air defence systems.

Israel and Palestinian militants in Gaza have fought three wars since 2008.

August has seen rocket fire from Gaza, infiltration attempts by armed Palestinians and return fire by Israel, threatening a fragile ceasefire.

Israeli prime minister Benyamin Netanyahu is fighting for reelection in next month's polls, with political opponents calling for tougher action against Islamist movement Hamas.

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