Gaza's 1.5 million residents are struggling to cope without electricity and other basic necessities on the fourth day of an Israeli blockade.
Hospitals have begun to run short of fuel for generators, and sewage has spilled out onto the streets.
Egypt started to close its breached border with the Gaza Strip on Friday but Palestinian militants bulldozed a new opening in a challenge to Cairo and Israel's blockade of the Hamas-run territory.
Palestinian crowds cheered as Hamas militants used a bulldozer to flatten sections of the chain and concrete fence. In a scene broadcast live on television around the world, Egyptian riot police watched from a distance as hundreds of people poured into Egypt.
Israeli air strikes overnight killed four Palestinian militants in the southern Gaza town of Rafah, where Hamas blasted open the border wall on Wednesday, letting tens of thousands rush across to stock up on goods in short supply in the impoverished strip, home to 1.5 million people.
Violence has also flared in the occupied West Bank, where Israeli troops shot dead a Palestinian teenager one day after Palestinian militants killed an Israeli border policeman and infiltrated a Jewish settlement near Bethlehem.
Hamas's armed wing claimed responsibility for the infiltration in which the two Palestinian attackers were killed.
The fall of the Rafah wall punched a new hole in a U.S.-backed campaign to curb the clout of Hamas and strengthen Palestinian President Mahmoud Abbas, nearly eight months after the Islamist group routed Abbas's Fatah forces in Gaza.
Israel said it had tightened its Gaza blockade last week to counter cross-border rocket fire, but after an international outcry, fuel and aid supplies were partially restored.
Israeli officials said Abbas, whose authority is largely limited to the West Bank, planned to meet Israeli Prime Minister Ehud Olmert on Sunday, seeking to push on with newly re-launched peace talks despite the setbacks.
Pressed by the United States and Israel to take control of the situation, Egyptian forces in riot gear lined the border and began placing barbed wire and chain-link fences to prevent more Gazans from entering Egyptian soil.
The Egyptian government faces a difficult balancing act. It does not want to be seen as aiding Israel in its blockade of Gaza, but it fears the spread of Islamist influence and the effects of becoming home to so many undocumented Palestinians.
Citing the breach in Gaza's southern border, some top Israeli officials have advocated cutting Israel's remaining links with the coastal territory and putting the onus on Egypt.
STANDOFF AT BORDER
Tensions flared at the border on Friday as some Palestinians in the crowd threw stones at Egyptian police, who responded with batons and water cannon.
"I have two brothers still inside Egypt. They should not close the border until everyone returns," said one of the Palestinian stone throwers, 20-year-old Mohammed al-Masri.
Egyptian security forces told the crowd over loudspeakers that the border would close at 3 p.m. (1p.m. British time), but a security source said orders had yet to be given to fully seal the area.
Hamas sources said the group decided to open a new section in the border fence to increase pressure on Egypt to give the militant group a say in how the border will be run in future.
Abbas has been seeking U.S. and Israeli support to take over control of all of the border crossings, a move Hamas hopes to prevent.
"We insist and urge our Egyptian brothers that there must be a mechanism to allow the passage of people and goods through the Rafah crossing in a legal and organised manner," Hamas government spokesman Taher al-Nono said.
Since militants blew up the wall at Rafah, the border has been transformed into a giant open-air market, selling everything from goats to full size refrigerators.
One Palestinian bought a camel in the Egyptian coastal town of el-Arish for his wedding day and rode it all the way home to Gaza City, a distance of more than 80 km (50 miles).
"I bought a motorcycle, cigarettes, biscuits, corn chips, cheese and a small generator. I think they can close the border now," said 38-year-old Saeed al-Helo after crossing back into Gaza. "I think Gaza has enough food supplies for a month."
Al-Nono said that was not the case. "The crisis in Gaza still exists, both in terms of fuel and electricity. What the merchants brought from Egypt was not enough to compensate for the shortages incurred over the last seven months," he said.
Israel, which occupied Gaza in 1967, pulled troops and settlers out in 2005, but it still controls the strip's northern and eastern borders, airspace and coastal waters.
Deputy Defence Minister Matan Vilnai said Israel wanted to hand responsibility for electricity, water and medicine supplies over to others.
