Israeli tanks destroyed a Hamas observation post in the northern Gaza Strip on Wednesday after the army said shots were fired at troops on the border. After the incident, residents of the Israeli border town of Sderot reported that homes were hit by machine gun fire from Gaza.
Israel reduced the number of troops along the border on Wednesday after no protests took place.
Hamas official Salah Bardawil said 50 of the 60 people killed in Monday's violence were members of the organisation. Earlier, Hamas had named only 10 of Monday's fatalities as Hamas members while Israel claimed that at least 24 of the fatalities belonged to militant groups.
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Israel said the lull in violence over the last two days was due to Egyptian mediation. Egyptian media cited Gaza sources as saying that Cairo contacted Hamas leaders on Monday and urged them to stop their protests over concern that an escalation could develop into another full-scale war.
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The Egyptians reportedly conveyed a message that Israel was determined to stop a breach of its border and would not be deterred by casualties.
Israeli-Turkish relations deteriorated further on Wednesday after a bitter exchange over the Gaza violence. Israel's ambassador to Ankara Eitan Na'eh, who was expelled by Turkish president Recep Tayyip Erdogan, was made to undergo a strict security screening at Istanbul International airport, including removing his shoes, in front of media cameras.
Israel called this a "deliberate humiliation" and in response the number two diplomat in the Turkish mission in Israel, Umut Deniz, was summoned to the foreign ministry in Jerusalem for a reprimand and was asked to show identification at the entrance.
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Israeli minister Yisrael Katz said he saw "no reason morally and historically" not to recognise the Armenian genocide, adding that Mr Erdogan, who recalled the Turkish ambassador in response to the Gaza killings, "is truly an enemy".
Meanwhile, Guatemala opened its embassy in Jerusalem on Wednesday.
"Two days ago, we opened the American embassy in Jerusalem and it's not a coincidence that Guatemala is opening its embassy in Jerusalem right among the first. You are always among the first," said Mr Netanyahu, recalling that Guatemala was the second nation, after the US, to recognise the state of Israel in May 1948.
Guatemalan president Jimmy Morales, who travelled to Israel for the embassy opening, described bilateral ties as a "love between brothers" that will last forever.
Chief Palestinian negotiator Saeb Erekat criticised Guatemala. “The Guatemalan government has chosen to stand on the wrong side of history, to side with violations of international law and human rights.”
Paraguay is also expected to move its embassy to Jerusalem by the end of the month but, despite intense Israeli diplomatic pressure, no other country has yet to confirm that they will follow suit.
The Palestinian ambassadors to Romania, Hungary, Austria and the Czech Republic were recalled to protest against the fact that officials from these countries participated in an official Israeli celebration of the US embassy move, even though the EU policy is against moving embassies to Jerusalem.