Argentine lawmakers on Wednesday approved an agreement with Iran to set up a controversial "truth commission" into a deadly 1994 bombing that killed 85 people and wounded 300.

The deal has been sharply criticized by Israel, Argentina's Jewish community and opposition politicians.

Israeli police on Wednesday confirmed they were investigating an apparent hate crime against an Arab woman in Jerusalem and said a policeman had been dismissed after praising the attack on Facebook.

The attack took place on Monday at one of the light rail stops in west Jerusalem, with an Israeli bystander capturing the event on camera then posting the account along with 14 photographs on her own Facebook page.

The army arrested on Wednesday an Egyptian national in Beirut's Shiyyah neighborhood on charges of spying for Israel.

"The man owns Gina Cell mobile phone store in Shiyyah,” al-Jadeed television detailed.

If Iran does not heed calls to halt its nuclear program, it should face "military sanction," Israel's Benjamin Netanyahu said on Wednesday in an apparent reference to a military strike.

"Iran is continuing to defy the international community, (and) doesn't seem to seek an end to its military nuclear program," the Israeli prime minister said during talks with visiting Sri Lankan Foreign Minister G.L. Peiris.

A stray mortar shell landed Wednesday in the Israeli-occupied Golan Heights, the army said, while also reporting that six wounded Syrians receiving treatment in Israel have been discharged from hospital.

"We found a shell in the central Golan Heights," a military spokesman said after troops saw smoke rising near an Israeli town in the central sector of the strategic plateau which borders war-torn Syria.

Israel's settlement construction in annexed east Jerusalem is part of a strategy aimed at preventing the Holy City from becoming the capital of two states, an internal EU report found on Wednesday.

In its Jerusalem Report 2012, a copy of which was seen by Agence France Presse, the European Union said Jewish settlement construction posed "the biggest single threat to the two-state solution."

The United Nations on Tuesday condemned the firing of a rocket from Gaza into Israel which it said had broken the longest ceasefire between the two sides in recent years.

Gaza militants fired the rocket in what they said was a response to the death of a Palestinian prisoner in an Israeli jail at the weekend. There are mounting international fears that serious new unrest could erupt in the Palestinian territories.

Gaza militants from Fatah's al-Aqsa Martyrs Brigades fired a rocket at Israel on Tuesday as a "preliminary response" after one of its members died in an Israeli jail.

It was the first time a Gaza rocket had struck southern Israel in more than three months, and stoked fears that the mass protests in the West Bank over the fate of prisoners in Israeli jails could spread to the Hamas-run territory.

The United Nations called Monday for an independent inquiry into the death of a Palestinian in Israeli custody, warning that mounting tensions risk an eruption of violence in the occupied territories.

U.N. Middle East peace envoy Robert Serry made the call in a statement after talks with Palestinian prime minister Salam Fayyad on the death of Arafat Jaradat at the weekend.

Israel on Monday demanded that the Palestinian Authority act "responsibly" and rein in unrest, as militants vowed revenge over the death of a Palestinian prisoner allegedly under Israeli torture.

A spokesman for Israeli Prime Minister Benjamin Netanyahu issued the appeal for calm, the second in as many days, as thousands of mourners attended a tense funeral in the West Bank for Arafat Jaradat who died Saturday in an Israeli jail.