An Israeli baby was lightly wounded by shrapnel on Monday afternoon when a rocket fired from Hamas-controlled Gaza slammed into her house in the southern town of Sderot and destroyed the child's nursery.

The baby's mother and grandmother were treated for shock following the attack.

Another Israeli woman was wounded a day earlier when rockets fired from Gaza hit the southern coastal city of Ashkelon.

Two Palestinian terrorists were killed on Sunday in an Israeli retaliatory air raid.