Israeli soldiers killed three Palestinians in Gaza, including a child, the military and residents said. Meanwhile, Palestinians criticized a US penalty against Israel for building a security fence in the West Bank as ineffective.
Late Wednesday, Israeli troops shot dead two Palestinians and wounded a third as they tried to flee after an army patrol encountered a group of armed men apparently preparing to ambush traffic on a road used by Jewish settlers in the southern Gaza Strip, the military said.
It remained unclear if the troops killed the armed Palestinians or another group, the army said. But the military is certain that at least two of the Palestinians were members of the militant Islamic Jihad group, the army added.
Earlier, a nine-year-old Palestinian boy was killed by gunfire while playing front of his house, Palestinians said. Soldiers fired at the neighborhood in the Egyptian border town of Rafah, Palestinians said. The army said it knew of no gunfire incidents in the area.
The US plans to penalize Israel for building a security barrier along the West Bank. But Israeli analysts agreed with Palestinians that the US$289.5 million deduction from loan guarantees was a cosmetic American move that would cost Israel little and would not stop construction of the barrier the Palestinians say would eat up significant portions of their land in the West Bank.
"This is only diplomatic finger wagging," said Udi Segal, diplomatic correspondent for Israel's Channel 2 TV.
The reduction comes from US$9 billion in loan guarantees pledged to Israel by the US over three years. According to US law, money spent by the Israeli government for settlements and related items in the West Bank and Gaza Strip must be deducted.
In Washington, US State Department spokesman Richard Boucher refused to say how much of the US$289.5 million deduction applied to the security barrier.
However, the real penalty is much less than US$289.5 million. Instead, it is only the difference between interest rates on loans.
The loan guarantees would allow Israel to borrow money at rates between 1 and 2 percent lower than its usual rate, Finance Ministry spokesman Eli Yosef said.
With the higher rates, Israel would pay an extra US$5.8 million in interest annually over the life of a replacement loan, usually between two and five years -- a minuscule amount for an economy that produces upward of US$100 billion a year.
If Israel decided not to borrow the full amount, then there would be no penalty at all.
The deduction "is a fairly painless rap on the knuckles," said Israeli political commentator Yossi Alpher, influenced by the upcoming US presidential campaign.
The bottom line -- Israeli officials said the fine will not stop Israel's construction of the barrier, a complex of walls, trenches and fences, which is to dip deep into the West Bank in several places to incorporate Jewish settlements there on the "Israeli" side, doubling back several times and enclosing many Palestinian villages.
A UN report said the barrier would carve out 14.5 percent of the West Bank, trap at least 274,000 Palestinians between the fence and Israel and cut hundreds of thousands of others off from their land.
Israel insists that the barrier is necessary to keep Palestinian suicide bombers and other attackers out of their country.