JERUSALEM   -  The Israeli navy intercepted a Swedish-flagged activist boat bent on breaching its more than decade-long blockade of Gaza, the second in less than a week, the military said on Saturday.

"The ship was monitored and was intercepted in accordance with international law," the military said in a statement, before the vessel, named Freedom for Gaza and carrying 12 people, was taken to the Israeli port of Ashdod.

"The (military) clarified to the ship's passengers that they are violating the legal naval blockade and that any humanitarian merchandise can be transferred to Gaza through the Port of Ashdod," the statement said. The people on board were taken for "further inquiry".

The organisers of the flotilla said the boat, which was carrying medical supplies, was intercepted in international waters.

"The demands of Ship to Gaza are that the ship with its crew and cargo will be returned to the site of the boarding, and that they will be allowed to go in peace through international and Palestinian waters in accordance to international law," they said in a statement.

Meanwhile, a Palestinian teen died of his wounds Saturday a day after he was shot by Israeli troops during clashes on the Gaza border, the territory's Hamas-run health ministry said.

Muadh al-Suri, 15, was shot in the stomach on Friday in central Gaza, ministry spokesman Ashraf al-Qudra said, raising the number of Palestinians killed by Israeli fire during those clashes to two, with over 200 wounded.

According to the Israeli army, some 8,000 Gazans had gathered at different spots along the frontier Friday, attempting to sabotage the Israeli border fence. A number of Palestinians "infiltrated" Israel and threw firebombs and "an explosive device" before returning to Gaza, it said.

Another Palestinian, 25-year-old Ahmed Yaghi, was killed by a sniper east of Gaza City on Friday.

Yaghi and Suri were buried on Saturday.

At least 159 Palestinians have been killed in border demonstrations that began at the end of March, while one Israeli soldier has been shot dead.

Palestinians have also flown balloons and kites carrying incendiary devices across the border, starting hundreds of fires inside Israel.

On Saturday, the Israeli army said an aircraft had fired at "a terrorist squad" launching "arson balloons" at Israel.

Palestinian sources said a drone was used by the army but that no one was wounded in the attack.

With borders to both Egypt and Israel largely sealed in recent years, Gaza suffers from desperately high rates of poverty and unemployment.

Israel insists its blockade is necessary to isolate Gaza's Islamist Hamas rulers, with which it has fought three wars since 2008.

Critics say it amounts to collective punishment of the coastal territory's two million residents.