Jerusalem (AFP) -
Palestinian militants fired volleys of rockets from Gaza into Israel, which responded with air strikes in the early hours of Thursday in the biggest escalation since an 11-day war last year.
A rocket from Gaza on Wednesday evening fell harmlessly in a garden in the southern Israeli city of Sderot, police said.
Israel struck back in central Gaza after midnight, witnesses and security sources said, prompting further launches of at least four rockets by militants in the besieged territory.
Israel's army said its jets had targeted a military post and a tunnel complex 'containing raw chemicals used for the manufacturing of rocket engines'.
Hamas, the Islamist movement which rules Gaza, said it had fired surface-to-air rockets at Israeli planes.
The exchanges come after nearly a month of deadly violence in Israel and the Palestinian Territories, focused on Jerusalem's flashpoint Al-Aqsa Mosque compound, known to Jews as the Temple Mount.
Hours earlier, Israeli police had blocked crowds of Jewish ultra-nationalist protesters from approaching the Muslim quarter of the Old City in east Jerusalem, aiming to head off an escalation after four weeks of violence that have left at least 36 people dead.
Last year, a similar ultra-nationalist march had been scheduled in the Old City when Hamas launched a barrage of rockets towards Israel, sparking the 11-day war.
Early Wednesday evening, more than a thousand ultra-nationalist demonstrators waving Israeli flags had gathered, some shouting 'death to the Arabs', but the police blocked them from reaching Damascus Gate and the Old City's Muslim quarter.
Far-right lawmaker Itamar Ben Gvir, a controversial opposition politician, led the protest after being barred from the Damascus Gate area earlier in the day by Prime Minister Naftali Bennett.
'I'll say it clearly, I'm not going to blink, not going to fold,' Ben Gvir told AFP, as his fans chanted 'Bennett go home!'
'I'm not allowed to enter Damascus gate,' the former lawyer said. 'Based on what law?'
Bennett had said earlier in a statement he had blocked the rally for security reasons.
'I have no intention of allowing petty politics to endanger human lives,' he said.
'I will not allow a political provocation by Ben Gvir to endanger IDF (Israeli army) soldiers and Israeli police officers, and render their already heavy task even heavier.'
Ben Gvir retorted Thursday that 'some Jews don't surrender to Hamas'.
- 'Provocation' -
Tensions are high as the Jewish Passover festival coincides with the Muslim holy month of Ramadan.
Palestinians and Israeli Arabs carried out four deadly attacks in Israel in late March and early April that claimed 14 lives, mostly civilians.
A total of 23 Palestinians have meanwhile been killed since March 22, including assailants who targeted Israelis, according to an AFP tally.
On Tuesday, Israel carried out its first air strike on the Gaza Strip in months, in response to the first rocket since January from the Palestinian enclave.
UN Secretary-General Antonio Guterres said he was 'deeply concerned by the deteriorating situation in Jerusalem'.
He added that he was in contact with the parties to press them 'to do all they can to lower tensions, avoid inflammatory actions and rhetoric', according to a statement by his spokesperson in New York.
Bennett, himself a right-winger and a key figure in Israel's settlement movement, leads an ideologically divided coalition government.
Earlier this month, his coalition lost its one-seat majority in the 120-seat Knesset, Israel's parliament, after a member left in a dispute over the use of leavened bread products in hospitals during Passover.
Then on Sunday, the Raam party, drawn from the country's Arab-Israeli minority, suspended its support for the coalition over the Al-Aqsa violence.
Right-wing lawmakers are under pressure to quit Israel's government, which is seen by some on the right as being too favourable to Palestinians and Israel's Arab minority.
Pnina, a 62-year-old civil servant demonstrating in Jerusalem on Wednesday, told AFP that 'we want to go to all of Jerusalem, and our government is not letting us'.