The attack killed a Thai guest worker in the agricultural village of Netiv Haasarah, which is just north of the border with the Gaza Strip. An unknown Gazan group, Ansar al-Sunna, claimed responsibility for the attack, Reuters reported.
"It doesn't matter what organization takes responsibility for the fire,'' said Israel's Deputy Defense Minister Matan Vilnai. "Israel isn't interested in a military confrontation, but it won't allow its residents to be shot at.''
The fatality will put pressure on Israel for a stepped-up military response in Gaza. It comes at a time when the US is pushing Israel to make gestures to the Palestinian Authority on reining in building in Jerusalem in order to get peace negotiations restarted. It could also be the first test of Prime Minister Benjamin Netanyahu's policy toward Hamas since he took office.
Severe clashes in Jerusalem
The attack comes two days after the worst Palestinian-Israeli clashes in Jerusalem in years. Hamas, which controls Gaza, called on Palestinians to initiate a new uprising and to take up arms against Israel in response to allegations of a plot to destroy Muslim holy sites in Jerusalem's Old City.
Israel launched a punishing offensive on the Gaza Strip last year to silence rocket fire. The war left about 1,400 Palestinians and a dozen Israelis dead.
Since the war, the border region has been relatively calm. Towns in southern Israel have begun to rebuild. Israel continues to enforce an economic blockade around the Gaza Strip and has warned that Hamas is rearming itself with longer-range and more powerful rockets.
The attack "damages the position of the Palestinians because Hamas will be seen more and more as an element of instability, and it will strengthen the voice of the right in Israel that whatever we do with the PLO [Palestine Liberation Organization] we will always have Hamas threatening us,'' said Meir Javedanfar, a Middle East expert based in Tel Aviv.
"It takes focus and attention away from getting back to the peace process, which is what America and the European Union want.''
The attack was launched while the European Union's foreign policy chief, Catherine Ashton, was paying a diplomatic visit to the Gaza Strip. In the upcoming days, United Nations Secretary-General Ban Ki-moon is also scheduled to visit Gaza.
In recent months, there have been reports of hard-line militants, disillusioned with Hamas's efforts to keep Gaza quiet, who have set up independent outfits as a challenge to Hamas rule. Experts have also warned about Al Qaeda-affiliated groups, but they are still in their infancy.