Israeli warplanes bombed southern Lebanon on Wednesday in what the Jewish state called a retaliation against Hizbollah targets for a strike on a collective farm.
The flare-up comes amid reports that the second phase of German-mediated prisoner swap talks between the Hizbollah group and Israel were close to a breakthrough on the fate of missing Israeli airman Ron Arad.
"The air force hit two Hizbollah posts in south-west Lebanon after anti-aircraft shells were fired from the general area into northern Israel," Israeli military sources said, adding that the shells hit a collective farm and a beach. They said no one was hurt in those strikes.
Hizbollah declined to comment but its mouthpiece al-Manar Television said the Syrian and Iranian-backed guerrilla group had fired anti-aircraft rounds at Israeli planes.
The Lebanese army said its gunners fired barrages earlier in the day at about a dozen Israeli jets that swooped over swathes of the country. No planes were reported hit.
Lebanese security sources said Israeli jets struck hillsides, from where witnesses saw two plumes of black smoke rising, near the southern port city of Tyre.
The missiles did not appear to have struck residential areas, witnesses said, but it was unclear if anyone was hurt.
The United Nations, which has repeatedly warned that over-flights and anti-aircraft fire could lead to a more serious conflict, expressed "great dismay" at Wednesday's escalation.
"One violation cannot justify another," the UN envoy for southern Lebanon said in a statement, urging "Israel to halt its over-flights and the Lebanese side to halt the ensuing and dangerous anti-aircraft fire".
Israel has flown regular sorties over Lebanon since withdrawing its troops from the south of the country in 2000 after a 22-year occupation, under attack from Hizbollah.