Several Israeli tanks and bulldozers have crossed into Gaza Strip and started a battle with Palestinian fighters, Palestinian security sources said.

An Israeli army spokeswoman confirmed that forces were operating in Gaza and had come under gun and mortar fire, aljazeera reported.

The incursion comes after two Hamas fighters were killed in an overnight Israeli air strike in southern Gaza, and two days after Palestinian fighters carried out a cross-border raid in which two Israelis were killed.

After Wednesday's raid by Palestinian fighters on a fuel tank, the Israeli Prime Minister Ehud Olmert vowed to "keep hitting Hamas" and end attacks from Gaza.

Meanwhile Palestinians protested against Israel's temporary shutdown of the terminal, which is Gaza's only source of fuel.

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