By mid-afternoon, as many as 170 protesters had been injured near the border, at least 22 by Israeli cross-border gunfire, according to Gaza's Health Ministry.
Israeli troops observed several people who had crossed the border fence at the southern Gaza Strip and placed firebombs, the military said. Protests demand the return of Palestinian lands they fled or were expelled from in present-day Israel.
This recent clash is one of the biggest clashes that occurred between Israeli soldiers and Palestinian protesters as the march entered sixth successive week.
Israel says it is protecting its borders and takes such action only when protesters, some hurling stones and Molotov cocktails trying to lay explosives, come too close to the fence.
Israeli soldiers fired live rounds and tear gas.
Five people were killed in an explosion on Saturday in the central Gaza Strip, according to Palestine's official news agency.
Crowds were smaller on Friday than in previous weeks, with Palestinians saying they expect a major protest on May 14, when the United States will move its embassy in Israel from Tel Aviv to Jerusalem.
A 32-year-old man wearing a camouflage hat with his face masked, a traditional keffiyeh scarf around his neck, said they hoped to fly around 50 kites.
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Rights groups say Israeli open-fire regulations are unlawful because they permit troops to use potentially lethal force against unarmed protesters.
"I'm not afraid, there's only one death", she said.
As the world celebrated International Workers' Day on May first, reports emerged that at least 400,000 Palestinians are now facing unemployment, and 150,000 work under precarious conditions in Israel and Jewish-only settlements within the West Bank.
"In the beginning we protested peacefully", said a kite maker who identified himself only by his nickname, Abu Ayed, fearing Israeli retribution.
"This is a cynical act of terror that harms the wellbeing of the Gaza residents and the humanitarian efforts made by Israel and many other countries", the army said.
"The matter is being looked into", a statement from the army said. The army confirmed the drone losses. The Israeli military put the turnout at about 7,000.
"If no solution happens by May 15 we will continue the protests or we die".