It stated that the two fighters were part of a military training in "Asqalan" center, one of its training locations in northern Gaza, and that many Palestinians, including political leaders of Hamas, were in attendance.
"The resistance can not allow the occupation to impose a policy of bombing sites and targeting fighters without paying the price", it said in a statement.
Israel says Hamas, which rules Gaza, is using the protests as cover to carry out cross-border attacks. Sources said that Hamas is unwilling to enter into any negotiations or provide any information about the Israeli soldiers detained, agreeing only to a prisoner exchange in return for the freeing of prisoners rearrested after the Gilad Shalit deal in 2011.
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Many buildings had been affected, debris is littering the streets and the power is out in many parts of the main city Mataram. However, a local search and rescue official said there had been at least one fatality on the Gilis and several injuries.
He said the movement was facing "rapid political and field developments".
An Israeli official told Israeli media that no agreement with Hamas would take place without the release of two Israeli civilians, Avera Mengistu and Hisham al-Sayed, and the bodies of two soldiers, Oron Shaul and Hadar Goldin.
The protests call for Palestinians to be able to return to the land they or their families fled or were expelled from in the 1948 war surrounding the creation of Israel.
The deaths of two of its fighters could trigger an escalation between Hamas and Israel.