Palestinian sources say an Israeli airstrike in the northern Gaza Strip has killed one person and injured at least two others.
Israel said its warplanes on Tuesday targeted militants planting a bomb close to Israeli soldiers.
Israeli forces have pounded Gaza with airstrikes and artillery shells for nearly a week as part of an offensive aimed at freeing a captured Israeli soldier.
On Monday, Israeli Prime Minister Ehud Olmert rejected a demand by Palestinian militants holding the soldier to release hundreds of Palestinian prisoners by early Tuesday. Mr. Olmert said his government will not conduct negotiations to win the release of the 19-year old soldier, who was abducted on June 25th.
The Israeli prime minister issued his statement after three Palestinian militant groups the Popular Resistance Committees, the armed wing of the governing Hamas movement and the Army of Islam in Gaza threatened unspecified consequences unless Israel meets their demand.
In Washington, a White House spokesman Tony Snow said U.S. officials are following the events in Gaza "very carefully." He said any return to talks on peace and security in the region begin with the release of the Israeli soldier.