Gunmen have killed seven people in attacks in southern Israel and Israel responded with an air strike in the Gaza Strip that killed six Palestinians, including leaders of a militant faction.
The attacks began when several gunmen ambushed a bus on its way to the city of Eilat.
Israel's military says the terrorists also fired an anti-tank rocket at another vehicle and, at the same time, a military patrol hit an explosive device.
Israeli military commanders said six civilians and one soldier were killed and another 25 people were wounded.
A senior Israeli official says the attackers had infiltrated from the Gaza Strip through Egypt's Sinai desert.
Israeli special forces were called in and the military said seven gunmen were killed in southern Israel, including two who blew themselves up in suicide attacks on one of the buses and in a confrontation with soldiers.
Egyptian soldiers apparently shot dead two gunmen, the military said.
Israel targets Gaza militants
Hours later, Israel struck against the Popular Resistance Committees, an armed faction that often operates independently of Gaza's Hamas rulers. The Israeli military said the PRC was behind the border attack.
The PRC said its commander, his deputy and three other members were killed in an Israeli air strike on a home in the southern Gaza town of Rafah.
The faction vowed revenge against Israel for the attack, which local Palestinians said also killed a nine-year-old son of the owner of the house.
Hamas in Gaza denied responsibility and said it would fight back if it came under Israeli attack.
Israeli officials have voiced concern that militant groups in the Sinai have been making use of a security vacuum left by the overthrow of Egyptian President Hosni Mubarak in February.
On Tuesday, Egyptian security sources said an army crackdown on armed groups in the northern Sinai had netted four Islamist militants as they prepared to blow up a gas pipeline.