Gaza: Palestinian factions battled in the Gaza Strip on Sunday, raising the death toll this weekend to at least two and 40 injured in the fiercest internal fighting since a ceasefire.

Local residents took shelter indoors as rivals Hamas and Fatah pounded each other's positions with rocket-propelled grenades and machine guns in southern Gaza.

Of the more than 40 Palestinians wounded in the fighting in Rafah, at least 10 were in critical condition, hospital officials said.

Meanwhile, an Israeli aircraft bombed an Islamic Jihad building hours after Palestinian militants infiltration into Israel. Two people were injured in the bombing, residents said.

The army said a separate air strike targeted a weapons production facility used by a militant offshoot of Fatah which joined Islamic Jihad in the raid.