Militants in the Gaza Strip have fired more than 150 rockets into Israel, the army says, prompting air strikes and tank fire on the Palestinian territory.
Sirens went off as people rushed to shelters in southern Israel. Two Israelis were wounded and a Palestinian man was killed in the exchange.
Four Palestinians, including two Hamas militants, were killed on Friday after an attack injured two Israeli soldiers.
The flare-up followed a truce in the run-up to Israeli elections in April.
It marks yet another increase in hostilities despite attempts by Egypt and the United Nations to broker a longer-term ceasefire, says the BBC's Tom Bateman in Jerusalem.
What happened on Saturday?
The rocket barrage sent Israelis hit several homes is parts of Israel bordering the Gaza Strip. Many residents rushed to bomb shelters.
The injured include a man in Ashkelon, 10km (six miles) north of Gaza, and an elderly woman in Kiryat Gat, further east.
The country's Iron Dome missile-defence system shot down dozens of the rockets, the Israel Defense Forces (IDF) said.
In response the IDF launched air and artillery strikes against 30 Gaza sites belonging to Hamas, Islamic Jihad and other militant groups.
Palestinian officials say a 22-year-old man was killed. Reuters news agency quotes a small pro-Hamas militant group as saying he was one of their fighters.
Several Gaza residents were also wounded.
What triggered the upsurge?
It began during weekly Friday protests in Gaza against Israel's blockade of the area. A Palestinian gunman shot and wounded two Israeli soldiers at the boundary fence.
The Israeli air strike in response killed two Hamas militants. Another two Palestinians were killed by Israeli fire at the fence.
Hamas, which controls the Gaza Strip, accuses Israel of failing to implement last month's truce deal, which was brokered by Egypt. Israel says the blockade is needed to stop weapons reaching Gaza.
Saturday's rockets attacks coincided with Palestinians burying the two militants.
"The resistance will continue to respond to the crimes by the occupation and it will not allow it to shed the blood of our people," Hamas spokesman Abdel-Latif al-Qanoua said in a statement on Saturday. He made no explicit claim for Hamas firing the rockets.
About two million Palestinians live in Gaza, which has suffered economically from the Israeli blockade as well as recent foreign aid cuts.
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