Israeli army has intensified its raids on Gaza over the past week along with banning the entry of fuel for Gaza's sole power plant, plunging the Palestinian enclave into darkness.
Israeli warplanes have bombed the Hamas-governed Gaza, as Palestinian rockets and firebombs landed in southern Israel.
Parts of southern Israel were partially cordoned off by the security forces, the Israeli military said on Friday.
Israeli planes launched raids against Gaza shortly after midnight on Thursday and then again later on Friday morning.
Israel said the bombs were in response to seven rockets launched from besieged Palestinian enclave, six of which were intercepted by its air defences.
Israel has intensified its raids on Gaza over the past week along with tightening of a blockade under which it has banned the entry of fuel for Gaza's sole power plant, plunging the Palestinian territory into darkness.
Israel bombing Gaza since August 6
Witnesses in Gaza said rockets were launched towards the town of Sderot, just across the security fence with Israel.
The rocket that was not intercepted damaged the roof of a house in Sderot, but did not cause any casualties, an AFP photographer said.
The number of rockets fired from Gaza was the largest number in a day since the latest round of exchanges began two weeks ago.
Arson balloons against Israeli siege
Israel has bombed Gaza almost every night since August 6 in retaliation for what it said were balloons fitted with firebombs, or, less frequently, rocket fire, across the fence.
The group behind the "arson balloons" into Israel told Al Jazeera that it is a "form of pressure" on Israel to lift devastating 13-year blockade.
"We came here to send a fiery message to the Israeli occupation that we in the Gaza can no longer tolerate the blockade that's been taking place for 13 years," the Qatar-based news website quoted Abu Yousef, spokesman of the group.
Hamas warns against Israeli escalation
Hamas "will not hesitate to fight a battle with the enemy if the escalation continues, if the bombardments and the blockade continue", Hamas spokesman Fawzi Barhum said in a statement.
"If the Israeli occupation continues its aggression ... it must pay the price," he added.
Israeli Defence Minister Benny Gantz warned on Friday the army would "attack our attackers and deal them a very heavy blow".
READ MORE: A Nakba that keeps repeating itself
Israel has also tightened its 13-year blockade of Gaza's two million inhabitants.
It has banned Gaza fishermen from going to sea and closed its goods crossing with the territory, prompting the closure of Gaza's sole power plant for want of fuel, limiting the territory's two million residents to around four hours of electricity a day.
Egyptian mediators were in Gaza earlier this week to try and shore up an informal truce but left without announcing any progress.
Israel has allowed the Gulf nation of Qatar to provide hundreds of millions of dollars in aid to Gaza in recent years to keep the economy from collapsing and preserve calm.
Egypt has acted to calm repeated flare-ups in recent years to prevent any repetition of the three wars Israel and Hamas have fought since 2008.
The latest ceasefire, which has already been renewed several times, is bolstered by millions of dollars in financial aid from Qatar to Gaza.
The truce provided for permits for Gaza residents to work in Israel and financing for Gaza development projects, both measures that would provide some economic relief in an impoverished territory where unemployment exceeds 50 percent.
Root of latest violence
According to a source close to Hamas, the movement wants the extension of an industrial zone in the east of Gaza and the construction of a new power line.
Hamas also wants the number of work permits issued to Gazans to be doubled to 10,000 once anti-coronavirus restrictions are lifted, the source said.
Sources told AFP the twin issues were at the root of the latest flare-up.
Israel and Hamas have fought three wars and several smaller battles over the last 13 years. Neither side is believed to be seeking war, but any casualties could ignite a wider conflict.