A ceasefire announced by Hamas held Sunday after the most severe exchange of fire between Israel and Palestinian militants in the Gaza Strip since a 2014 war, reducing fears of a wider conflict for now.
Hamas, the Islamist movement that runs the blockaded Gaza Strip, said late Saturday a ceasefire had been reached with the help of Egypt and others, though Israel declined to comment.
The United Nations' Middle East envoy Nickolay Mladenov was in Gaza and "working with all concerned parties to de-escalate the situation," a UN official said on condition of anonymity.
Despite a couple of lower-level exchanges of fire overnight, calm returned to the Gaza Strip on Sunday morning after a day that saw dozens of Israeli air strikes, killing two Palestinians, while some 200 rockets and mortars were fired from the enclave into Israel.
Four Israelis were wounded when a rocket hit a house in the city of Sderot near the Gaza Strip, authorities said.
The two Palestinians killed were aged 15 and 16, caught in an Israeli strike on a building in the west of Gaza City, the enclave's health ministry said.
Twenty-five people were wounded across Gaza, the ministry said. 
A Palestinian man and his son were also killed in an explosion on Sunday in Gaza City, but police said it was not the result of Israeli fire.
Hamas said it fired at Israel in defence in response to air strikes, which came after a soldier was wounded by a grenade along the Gaza border.
Fawzi Barhoum, Hamas spokesman, said "the protection and the defence of our people is a national duty and a strategic choice."
Israel blamed Hamas for the escalation, pointing to months of protests and clashes along the border that its military argues the Islamist movement is seeking to use as cover for attacks.
There have also been hundreds of fires at Israeli farms caused by kites and balloons carrying firebombs from Gaza, leading to political pressure on the government and military to take action against Hamas.

 'Hardest blow'

Israeli Prime Minister Benjamin Netanyahu said late Saturday that Hamas had been hit with "the hardest blow" since a 2014 war "and we will increase the strength of our attacks as necessary."
Thick plumes of smoke rose over parts of the Gaza Strip on Saturday as Israel hit dozens of targets it said belonged to militants, including a high-rise building allegedly used by Hamas as a training facility with a tunnel underneath.
In Israel, air raid sirens on Saturday sent people rushing to shelters in areas surrounding the Gaza Strip as rockets and mortars were fired from the Palestinian enclave at nearby communities.
Israel said its air defences intercepted around 30 of the some 200 rockets and mortars fired.
Tensions have been building between Hamas and Israel for months over mass protests and clashes along the border fence. The two sides have already fought three wars since 2008.
The protests have called for Palestinian refugees to return to their former homes now inside Israel.
Since the protests and clashes broke out along the border on March 30, at least 141 Palestinians have been killed by Israeli fire.
The majority of those killed were involved in protests and clashes but others were seeking to breach or damage the border fence.
No Israelis have been killed.
The arson balloons and kites from Gaza have caused 750 fires and burned 2,600 hectares, leading to hundreds of thousands of dollars in damage, according to Israel's fire service.
On July 9, Israel closed its only goods crossing with the Gaza Strip in response to the fires.
Hamas called the move a "crime against humanity," with Gaza already suffering from deep poverty and worsening humanitarian conditions.

Border protests

Border protests peaked on May 14, when the United States moved its Israel embassy to the disputed city of Jerusalem, but have continued at a lower level since then.
On Friday, Israeli troops shot and killed two Palestinians, including a teenager, and wounded hundreds of others in border clashes.
An Israeli soldier was also moderately wounded when a grenade was thrown at him from the northern Gaza Strip, the military said.
Molotov cocktails, flaming tyres and stones were also hurled in the direction of soldiers, according to the army.
Israel says its use of live fire is necessary to defend its borders and stop infiltrations. Palestinians and rights groups say unarmed protesters are being shot while posing no real threat.
Israel's army said Saturday's strikes targeted military facilities belonging to Hamas.
Among the main targets were the "Hamas Battalion HQ in Beit Lahia, which includes urban warfare training facilities, (a) weapon storage warehouse, training compounds, command centres, offices and more", the army said in a statement.

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