Israeli and Palestinian forces have continued cross-border shooting for a second day in the worst escalation of violence between Israel and Gaza in weeks. A cease-fire brokered by Egypt earlier on Sunday appears to have faltered.

Two Palestinian militants were killed and another wounded in a fresh Israeli airstrike on Sunday afternoon, Al Jazeera reported. The strike occurred along Gaza's border with Israel. The Democratic Front for the Liberation of Palestine, a small militant group, says the casualties were members of its organization.

The Israeli military confirmed the airstrike, but offered few further details.

The airstrike occurred despite reports that a cease-fire agreement between Israel and the Palestinians had been reached earlier on Sunday through Egypt’s mediation.

The almost two-month quiet was interrupted on Wednesday by a rocket attack by Islamic Jihad. The group said that it was launched to mark the 16th anniversary of the assassination of its founder by Israel.

Israeli Prime Minister Benjamin Netanyahu, speaking at a special cabinet session on Sunday, reiterated his government's policy of strict retaliation against those that attack Israel and warned armed Palestinian groups, "Do not test our determination."

Netanyahu told ministers that Israel's defense policy was based on two principles: "Kill or be killed," and "He who harms you should bear the blood on his head," the Israeli newspaper Haaretz reported.

Gaza-based political analyst Hani Mahmoud says the Israeli cabinet has made a habit of trying to distract attention from problems at home.

“Netanyahu’s strategy every time is to come out as the savior of the State of Israel by instigating violence here [in Palestine],” he said. “If it does not happen in Gaza, [then by] putting more settlements in the West Bank, [or] there is an intensification of the siege of Gaza. The cycle of violence is going on forever, and will likely to continue.”

Roughly 40 missiles and mortar rounds were fired against Israel over the weekend, killing one person and injuring at least five others. The Israeli airstrikes against Gaza killed five Islamic Jihad operatives, one of them a senior commander, Ahmed al-Sheikh Khalil, and wounded 15 others.

The exchange of fire continued overnight, with Palestinians firing 10 rockets toward Israel early on Sunday morning. Israel reacted with aircraft targeting six militant sites in Gaza.

It is the worst outbreak of violence in weeks, following a successful prisoner swap between Israel and Hamas. Israeli soldier Gilad Shalit, who was taken prisoner by Hamas in 2006, was handed over to Israel on October 18. His release was part of a deal which saw Shalit swapped for 1,027 Palestinian prisoners.

Among the hundreds of Palestinian prisoners who are still in Israeli jails, and who are still scheduled to be released as part of the prisoner-exchange deal, are members of the Democratic Front for the Liberation of Palestine.

The DFLP is one of the small Palestinian groups that claimed responsibility for the renewed rocket fire into Israel. The new violence jeopardizes the deal, and some warn it might become a convenient excuse for the Israelis not to release hundreds of Palestinian prisoners.

Quartet brokering a peace deal

On October 27, Israel and the Palestinians declared their readiness to cooperate with the Middle East diplomatic Quartet on an immediate resumption of dialogue.The sides agreed to present detailed proposals on territorial and security matters within three months, and to make substantial progress within six months.

Russia is paying close attention to the current escalation of tension in Gaza. Russia’s Foreign Ministry issued a statement Sunday saying that "Moscow is deeply concerned about the current developments in the Gaza Strip and in southern Israel, where confrontation has entered a new round, undermining the diplomatic Quartet’s efforts to relaunch the talks between Palestine and Israel.”

"A new spiral of confrontation is undermining the efforts which the Mideast Quartet of international mediators is actively taking in compliance with the Quartet's statement made in New York on September 23 to reset the negotiation process between Israelis and Palestinians," the document reads.

During the talks in New York, on the sidelines of the UN General Assembly on September 23, the international mediators – Russia, the United States, the United Nations and the European Union – called on Israel and the Palestinians to resume direct peace talks without preconditions within a month and commit to sealing a deal by 2013.