Shortly before the rocket hit, an official told AFP Israel was willing to extend the lull by another three days as the Palestinians expressed hope they could reach a deal in indirect talks brokered by Egypt.
Israel police and the army said the rocket hit an open area near Gaza's northern border shortly after sirens rang out across the south.
But Hamas, Gaza's Islamist de facto rulers, said its militants were not responsible.
The attack jeopardised the hopes of millions who were banking on Egyptian mediators to clinch an agreement after days of frantic shuttle diplomacy between Israeli and Palestinian delegations.
Without agreement on an extension or a long-term truce, the two sides risk a resumption of the deadly fighting, which has killed more than 1,950 Palestinians and 67 on the Israeli side since July 8.
Earlier today, an ordnance blast killed five Palestinians and an Italian journalist in the northern town of Beit Lahiya as a Palestinian bomb disposal squad was trying to disable an Israeli missile.
Besides his work as a translator, Abu Afash also worked part-time as an administrative assistant in AFP's Gaza bureau. He leaves behind a wife and two girls, aged seven and two.
Camilli, who is survived by a wife and three-year-old daughter, had worked for The Associated Press since 2005.
Both men were killed as they covered the story of experts dismantling unexploded ordnance.
One of AP's Palestinian photographers, Hatem Moussa, was also badly wounded along with another four people, medics said.
As the deadline drew closer, an official told AFP the Israeli team had agreed to extend the lull for another three days.
"Israel agreed to an Egyptian proposal to extend the truce by 72 hours," the Israeli official told AFP shortly after the negotiating team returned from Cairo.
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