About 15 tanks, accompanied by attack helicopters, entered the neighborhood, called the Austrian project, and knocked down the exterior wall around Mubarak Hospital on the outskirts of the city, witnesses said. 

Two Palestinians were wounded moderately in exchanges of gunfire with Israeli soldiers, hospital officials said. 

The Israeli military confirmed that an operation was in progress in the area, noting that Palestinian militants have been carrying out attacks recently in the area. 

On Wednesday, a Palestinian sniper shot and killed an Israeli soldier near Khan Younis. Israeli forces destroyed the building the sniper used. 

Israeli incursions into Gaza cities and towns have been frequent, with Israel saying its forces are trying to destroy the "terrorist infrastructure" there. 

Those Israeli operations have stepped up in the last two weeks after Palestinians blew up a tank in northern Gaza, killing four soldiers. Also, soldiers held a Palestinian town in northern Gaza for more than a day after militants fired rockets at an Israeli town just outside Gaza.