Israeli jets have attacked 25 targets linked to Hamas in the Gaza Strip, after the group launched rockets and mortar shells at Israeli territory, the military said.
Three Palestinians were lightly injured during the attacks in the early hours of Wednesday, residents said. The exchange was one of the most intense recent barrages of rocket fire and air strikes.
No casualties were reported in Israel. Air raid sirens and Israeli phone warning applications sounded throughout the predawn hours.
The Israeli military said 45 rockets and mortar shells were fired at Israeli territory and said its Iron Dome anti-missile shield intercepted seven rockets.
While Hamas praised the rocket attacks from Gaza into Israel on Wednesday, it did not take responsibility for them.
Hamas spokesman Fawzi Barhoum said it was time for new rules of engagement, where "bombing is met with bombing".
"It's the Israeli occupation that started the escalation.The resistance has warned against continuing to target civilians, fishermen, farmers, and resistance positions.
"It's time to ... present new rules of engagement: bombing is met with bombing. Whoever began the escalation should be responsible for the consequences.
"The resistance is not interested in a new war at all, but we always want to defend the Palestinian people.
"The peaceful demonstrations in all forms will continue on the eastern border and the Palestinian resistance will be ready to protect Palestinian civilians and defend them."
Palestinian rocket fire came hours after the Israeli military said it struck Hamas infrastructure in response to "arson balloons" launched from Gaza into Israel.
Israel has carried out air raids in the Gaza Strip over the past few weeks, saying it was retaliating for Palestinians setting fire to Israeli land. In recent weeks, Palestinian protesters have used flaming objects attached to kites to set fire to agricultural land just over the border fence with Israel.
Al Jazeera's Harry Fawcett in Jerusalem said that over the last few days, "a number of incendiary kites and balloons [have been] flown from Gaza into Israeli territory. They (the kites) have lit dozens of fires."
"In response to that, we've seen some strikes from the Israeli air force on Hamas targets.
"Last night, that escalated with more than 45 rockets being fired from Gazan territory into southern Israel and areas bordering Gaza Strip. In response, [Israeli forces] struck 25 separate Hamas targets.
At least 127 Palestinians have been killed by Israeli troops during mass demonstrations and 3,000 have been injured along the Gaza border since March 30.
Israel's tactics in confronting the weekly Friday protests have drawn international condemnation.
The demonstrations have been staged by Palestinians demand the right to return to homes their families fled or were driven from following the founding of Israel 70 years ago.
Around two million people live in Gaza, most of them stateless descendants of refugees from what is now Israel. The territory has been controlled by Hamas for more than a decade, during which it has fought three wars with Israel.
Israel and Egypt maintain a blockade of the strip, citing security reasons, which has caused an economic crisis and collapse in living standards over the past decade.
