The Israeli military has shot and killed two Palestinian fighters in the Gaza Strip.

The Israeli army says soldiers saw two armed men east of Gaza City, near the border with Israel, and fired on them.

A statement by Hamas's armed wing said that the men were killed in exchanges of fire on the outskirts of Gaza City.

Hamas seized control of Gaza on June 15 after it overran forces loyal to Palestinian Authority President and Fatah leader Mahmoud Abbas.

Gaza has been largely cut off from the outside world since then.

The territory's economy is in deep crisis and there have been reports of shortages of medicines and food.

Hamas won Palestinian elections last year, but was shunned by Israel and the West because it refused to recognise Israel and renounce attacks on Israel.

PHOTO CAPTION

A Palestinian boy cries during the funeral of two Palestinian children after they were killed in Gaza August 7, 2007. (Reuters)

BBC (summarized)