Israeli media said the military also conducted airstrikes, reviving a tactic it had largely halted during the past two decades.
The violence marked a rare use of Israeli airpower in the territory. During the clashes, Palestinian militants detonated a roadside bomb next to an Israeli military vehicle.
Palestinian health officials said 13 people were killed in all, including the commanders, their wives, several of their children and others nearby.
Israeli Prime Minister Benjamin Netanyahu on Saturday announced a series of punitive steps against the Palestinians, including plans to beef up Jewish settlements in the occupied West Bank.
The incoming Israeli ruling coalition agreements will make it the country's most religious and right-wing government in history, potentially putting it at odds with large parts of the Israeli public.
Australia's government Cabinet agreed to again recognize Tel Aviv as the capital and reaffirmed that Jerusalem's status must be resolved in peace negotiations between Israel and the Palestinians
A Palestinian gunman opened fire at a bus near Jerusalem's Old City early Sunday, wounding eight Israelis in an attack that came a week after violence flared up between Israel and militants in Gaza.
Palestinian militants fired a rocket into southern Israel early Saturday. Hours later, Israeli aircraft carried out a series of airstrikes.
Jewish pilgrims visited early Sunday ahead of a nationalist parade through the Old City, prompting Palestinians to throw rocks and fireworks.
The fighting between Israel and Hamas is straining U.S. interfaith groups, even during the cease-fire. They've lost some members because of the pressure. But others are forging ahead.