Troops shot toward the boys, who turned out to be unarmed, in an area where Palestinian militants have repeatedly planted explosives or tried to sneak into Israel, the army said. The area, along the fence between Gaza and Israel, has been off limits to Palestinians during more than three years of fighting.
Also, in the West Bank city of Nablus, soldiers blew up a four-story apartment building Thursday during a standoff with a Palestinian fugitive.
The military said the blast was set off after the wanted man hiding in the building refused to surrender and instead fired on soldiers.
Militants said the fugitive slipped out of the building before the blast and later called members of his group, Al Awda, to say he was OK. Al Awda is one of several armed gangs in Nablus with loose ties to Palestinian leader Yasser Arafat (news - web sites)'s Fatah (news - web sites) movement.
The building, owned by the wanted man's father, had six apartments that were home to 40 people.
The Palestinian boy killed Thursday, Mohsan Daur, was from the Jebaliya refugee camp in northern Gaza.
Mohsan's uncle, Hassan, said his nephew and several other boys from the neighborhood set out to hunt goldfinches east of Gaza City, near the border fence, in one of the few green areas in overpopulated Gaza.
Some Palestinian children hunt birds for pocket money, selling them for meat or as pets. A goldfinch can bring up to $20 in Gaza City's markets; many Palestinians keep caged songbirds in their homes.
Asked why Mohsan's family didn't stop him from going into the dangerous border zone, where trespassers are often shot by Israeli soldiers on sight, the uncle said: "Children their age have no place to go, they have no playground."
The military said soldiers spotted seven figures with a ladder near the border fence Thursday morning. Troops opened fire, believing those approaching might be militants trying to sneak into Israel or plant anti-tank mines. The shootings took place in daylight, but the military said it was not clear whether troops realized those near the fence were youngsters.
After the incident, Israeli paramedics treated two wounded youngsters, who were then taken to an Israeli hospital for surgery.
Four other boys ran back toward Gaza City. When Mohsan remained missing, Palestinian medics asked for and eventually were given Israeli permission to drive into the border zone to look for the boy. His body was found in the area where the other two boys had been wounded.
Mohsan, who was in fifth grade, suffered a single shot to the back of the head, said Dr. Baker Abu Safiyeh at Gaza City's Shifa Hospital.
Also in Gaza, Palestinian workers staged a demonstration against stringent new security measures that Israel imposed at the Erez crossing after a female suicide bomber from Hamas killed four Israeli border guards there last week.
About 10 Palestinians were slightly wounded in the scuffle with troops, who fired rubber-coated metal bullets and tear gas at the crowd of angry laborers in the third such incident at Erez in the past four days.
Palestinian workers say the new security measures force them to stand in line for hours from before dawn, remove outer garments and walk slowly through the crossing holding their hands over their heads.
The checkpoint was closed for several days after the suicide bombing, but was opened with new security procedures to allow thousands of Palestinians to get to their jobs in Israel and the Erez industrial zone.
About 19,000 Palestinians from impoverished Gaza have permits to cross into Israel for work, a fraction of the number allowed in before violence flared more than three years ago.