The violence has further dimmed the chance of peace talks resuming between Israel and the Palestinians, already a bleak prospect since the militant Hamas movement took office in March after winning elections. Hamas is sworn to Israel's destruction.
Relatives said one of the civilians, a 75-year-old man, was killed when he went onto the balcony of his home in the northern town of Beit Hanoun to take his disabled son inside. He was shot in the head by Israeli troops on a rooftop, they said.
Israel's army said its forces were targeting only militants.
''We have no knowledge of such an incident at the moment,'' a spokeswoman said.
Among the dead was a militant who was killed in fresh fighting with Israeli troops in the town, witnesses said.
Hospital officials said 15 people had been wounded, including four children and a woman who were hurt when a tank shell hit their house.
''Many of those who were killed and wounded were hit by Israeli sniper fire,'' said Muawiyah Hassanein, a Palestinian Health Ministry official.
Troops entered Beit Hanoun yesterday in an operation the government said was aimed at destroying sites used to fire rockets at Israel and to dismantle ''terror infrastructure''.
Israeli forces killed nine Palestinians including at least five militants yesterday. One Israeli soldier was killed.
The assault is one of the biggest since Israel launched an offensive in Gaza to press for the release of a soldier captured by gunmen who carried out a cross-border raid in June.
Some Hamas officials have said the operation could affect Egyptian-brokered talks aimed at arranging a swap of Palestinian prisoners in Israel for the soldier.
Militants have also launched rockets at Israeli border towns despite the raid. At least three were fired on Thursday. No one was wounded.
Some 280 Palestinians have been killed in the four-month-old Israeli offensive, about half of them civilians. Three Israeli soldiers have been killed.
''LASTING PEACE'' Israel withdrew its army and Jewish settlers from Gaza last year after a 38-year occupation, but tension increased along the frontier when Hamas took office and rebuffed Western demands to recognise Israel and renounce violence.
That prompted the West to impose sanctions on the government.
While adamantly opposed to explicit recognition of Israel, some Hamas officials have sought to formulate wording that suggests a softer position as a way of restoring Western aid.
Ahmed Youssef, an adviser to Prime Minister Ismail Haniyeh, said Hamas was prepared to offer Israel a long-term ceasefire to enable the negotiation of a ''lasting peace''.
''... Hamas proposes a long-term truce during which the Israeli and Palestinian peoples can try to negotiate a lasting peace,'' Youssef wrote in an opinion piece published in the International Herald Tribune today.
Israel has dismissed similar overtures. It says it will speak only to a Palestinian government that recognises the Jewish state, forswears violence and accepts interim peace deals.
Hamas ultimately seeks an Islamic state in place of Israel.
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