Palestinian gunmen from Hamas and Fatah exchanged fire in the Gaza Strip early Sunday, killing a local militia leader and wounding seven people in the most serious flareup of violence since a power-sharing deal between the political rivals last month. Both sides blamed each other for starting the battle in the northern town of Beit Hanoun. Hamas said a truckload of Fatah gunmen opened fire on the group's forces near the town's sports club, killing a Hamas field commander, Muhammad Kafarneh. Fatah said the shooting began when Hamas attacked a compound of the security forces with rocket-propelled grenades. Later, Hamas and Fatah gunmen also exchanged fire for a few minutes in Gaza City. In another incident, three Gaza fishermen were wounded when an Israel Navy vessel fired on their boat near the Gaza-Egypt border, Palestinian security officials said. The IDF said a naval patrol spotted three boats, suspected of carrying smugglers, quickly approaching Gaza from the direction of Egypt before dawn and opened fire when the craft ignored warnings to turn back. A military statement said the navy has repeatedly foiled past arms smuggling attempts, but gave no further details on Sunday morning's incident. Sunday's death was only the second from Palestinian infighting since Hamas and Fatah agreed to a power-sharing arrangement in Saudi Arabia. The violence followed an incident in the West Bank on Saturday in which gunmen fired on the car of Prisoners Affairs Minister Wasfi Kabha of Hamas, security officials said. Nobody was injured in the attack, which Hamas blamed on Palestinian security officials with ties to Fatah. Security officials said they did not know who was responsible. The Palestinian unity deal, which has not been finalized, was intended to halt months of fighting in which more than 130 people were killed. But tensions have remained high since the accord was announced weeks ago. Palestinian Authority Chairman Mahmoud Abbas of Fatah hopes the coalition government, to be formed within two weeks, will also help end an international boycott of the year-old Hamas government and lead to a resumption of peace talks with Israel. The international community has said it would withhold judgment until it sees the new government's political program. However, the coalition, in deference to Hamas, is unlikely to agree to the world's conditions for acceptance, including recognition of Israel. With the Hamas-Fatah coalition not yet established, little progress was expected at a meeting Sunday between Abbas and Prime Minister Ehud Olmert. Government spokeswoman Miri Eisin said Israel would not consider a resumption of peace talks unless it wins recognition from a new PA unity government, and unless Palestinians halt rocket fire from Gaza. "We are not at a phase where we're actually talking about substance," Eisin said. "We're at a point in which we're trying to build confidence between the sides." The Palestinians want to resume talks on a final peace deal, which broke down more than six years ago. However, Palestinian negotiator Saeb Erekat said progress toward that goal is unlikely. "These are difficult times between us and I don't want to raise expectations," Erekat said. Abbas will ask Olmert to halt IDF operations in the West Bank, as part of an effort to broaden an informal cease-fire, in place in Gaza since November, Erekat said. Olmert and Abbas will also discuss Egyptian attempts to win the release of Cpl. Gilad Schalit, who was kidnapped in Gaza in June, Erekat said. Sunday's meeting is the second between Olmert and Abbas in a month. US Secretary of State Condoleezza Rice hosted the previous talks on February 19 and is expected back in the region later this month, Army Radio said.