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Israeli forces are still trying to defeat the last groups of militants holed up in several towns since Hamas launched its unprecedented attack on Saturday.
Israeli forces are actively fighting Hamas in two locations inside Israel, after the country formally declared war.
Reports differ on the exact nature of what occurred during the gun battle, but both sides have linked the exchange of fire to an earlier drug-smuggling attempt.
The Israeli military conducted airstrikes against targets in the Gaza Strip, followed by strikes into Lebanon on Friday morning