Israel's army said an exchange of fire erupted on Sunday during an operation in the Gaza Strip, while Palestinian officials reported six people killed, including a local commander of Hamas's armed wing.

"During (Israeli military) operational activity in the Gaza Strip, an exchange of fire evolved. More details to follow," an Israeli army statement said. 

Palestinian security sources said the clash occurred east of Khan Yunis in the southern Gaza Strip.

Gaza health ministry spokesman Ashraf al-Qudra said six Palestinians were killed. One of the dead was a local commander for Hamas's armed wing, the Ezzedine al-Qassam Brigades, a local hospital reported.

After the clash erupted, sirens were reported in southern Israel, indicating possible rocket fire from the Gaza Strip.

Israeli military spokesman Jonathan Conricus said all Israeli soldiers involved had returned to Israel.

"IDF operated in the Gaza Strip, exchange of gunfire ensued," he wrote on Twitter, referring to the Israel Defence Forces.

"All IDF soldiers back in Israel. Several alarms have sounded in southern Israel."

Fawzi Barhoum, a spokesman for Hamas, the Islamist movement that runs the Gaza Strip, denounced a "cowardly Israeli attack."

Hamas's armed wing alleged in a statement that an Israeli special forces team infiltrated near Khan Yunis in a civilian car.

Israel's military had not confirmed those details.

Israeli Defence Minister Avigdor Lieberman held security consultations at military headquarters, his office said.

Israeli Prime Minister Benjamin Netanyahu was in Paris for World War I commemorations.

The clash comes after months of deadly unrest along the Gaza-Israel border had appeared to be calming.

Recent weeks have seen Israeli decisions to allow Qatar to provide the Gaza Strip with millions of dollars in aid for salaries as well as fuel to help ease an electricity crisis.

Netanyahu had earlier Sunday defended his decision to allow Qatar to transfer the cash to Gaza despite criticism from within his own government over the move, saying he wanted to avoid a war if it wasn't necessary.

Major protests along the Gaza-Israel border began on March 30.