Israeli tanks advanced into the Gaza Strip on Friday after the worst clash with Palestinian fighters in 14 months killed two Israeli soldiers and four Palestinians. Palestinian sources reported more casualties in the fighting. They said five Israeli tanks and two armored bulldozers advanced from the east firing shells at targets near the town of Khan Younis in the centre of the narrow coastal enclave. The Gaza-based militant group Popular Resistance Committees confirmed one of its fighters was critically wounded by shelling. Palestinian sources reported Israeli helicopters and unmanned military drones in the skies. Witnesses near the scene said the sounds of gunfire abated an hour before midnight (2100 GMT) but the tanks were still in place firing occasional rounds. Residents were fearful of a bigger Israeli incursion, and evacuation warnings were given. The Israeli army earlier said an officer and a conscript were killed when Palestinian gunmen fired on an Israeli military patrol inside the Strip. Two soldiers were wounded and two Palestinian fighters also died in that clash, it said. Palestinian officials did not immediately confirm the deaths but said at least five Palestinians, one a 10-year-old boy, were wounded according to Gaza hospital officials. “I think it's true to say that this is one of the fiercest days we have had since operation Cast Lead happened,” Israeli army spokeswoman Avital Leibovich said. The clash did not appear to be directly linked to the current diplomatic impasse between Israel, the Palestinians and the United States over Israeli settlement of occupied West Bank land and stalled efforts to relaunch peace talks. The militant group Hamas said its men had fired on Israeli soldiers who crossed into the Strip. Hundreds of Hamas supporters took to the streets of Jabalya refugee camp in the northern Gaza Strip to celebrate the killing of the two Israeli soldiers, led by senior Hamas lawamaker Mushir Al-Masri, who praised the battle. “Entering Gaza is not a picnic,” he said. “The Zionists cannot come in anytime they wish and leave anytime and however they want,” Masri told the crowd. “The Qassam Brigades (Hamas's armed wing) were ready and taught them a lessson and they should not repeat such a foolish act,” Two other groups, Islamic Jihad and Al-Aqsa Martyrs Brigades, said their men also took part in the fighting. Israeli armoured pursuits into Gaza are not unusual. Israel adamant on settlements Israel insisted Friday it would continue construction in occupied East Jerusalem, taking an uncompromising stance against US pressure following a tense visit by Prime Minister Benjamin Netanyahu to Washington. The refusal to change long-standing Israeli policy signaled that a high-profile rift between the two allies remained wide, with stalled Mideast peace talks caught in the middle. “The prime minister's position is that there is no change in Israeli policy on Jerusalem,” Netanyahu's office said in a statement. Shortly after, he convened a previously scheduled meeting of key ministers to frame a response to Washington's demands for Israeli peace gestures. And the Haaretz newspaper cited him as saying he has no intention of breaking his right-wing coalition to form a more centrist alliance. He also made it clear he refused to halt settlement construction in East Jerusalem because of his own beliefs and not because of pressure from the right, according to the newspaper. The hawkish premier was discussing the US demands with his inner forum of seven senior ministers. Cabinet Secretary Zvi Hauser said it was unlikely there would be quick agreement from the seven and denied media reports of a US deadline to supply answers by Saturday night. “I suggest you wait patiently,” he told public radio. “If there is a necessity for further discussions they will happen.” “All aspects of the issue will be examined and they will formulate Israel's position according to Israel's interests and in the time needed to do so,” he said. Israeli media said it was unlikely that the security cabinet, which includes several hardline politicians, would reach agreement. Meanwhile, a pro-settler lobby in parliament sent a letter to some of the ministers urging them not to cave in. “There is no place for further concessions from Israel as a condition to renewing talks. Don't surrender to Palestinian blackmail and international pressure for further concessions,” said the letter from the Land of Israel Lobby.