Iraq signed an agreement with British energy giant British Petroleum on Thursday to develop four oil and gas fields in the northern province of Kirkuk.

A memorandum of understanding was signed by Iraq's Oil Minister Hayan Abdel Ghani and BP's CEO Murray Auchincloss, Prime Minister Mohamed Shia al-Sudani's media office said.

"The memorandum includes the rehabilitation and development of the four oilfields under the North Oil Company in Kirkuk: the Kirkuk oilfield, Bai Hassan, Jambur and Khabbaz oilfields," the statement said.

Israel's army confirmed on Thursday that Hamas military chief Mohammed Deif was killed in an air strike last month in the southern Gaza Strip.

The announcement came a day after Hamas and Iran said the Palestinian movement's chief Ismail Haniyeh was killed in Tehran. Israel has not commented on that report.

"Mohammed Deif, the Osama bin Laden of Gaza was eliminated" on July 13, Defence Minister Yoav Gallant said.

This is a "significant milestone in the process of dismantling Hamas" in Gaza, Gallant added.

Iran and its regional allies vowed retaliation on Thursday for the deaths of Hamas and Hezbollah leaders, raising regional tensions as mourners filled Tehran's city centre calling for revenge.

A public funeral was held for Hamas's political chief Ismail Haniyeh in the Iranian capital where he was killed early Wednesday in an attack on which Israel has not commented.

An Israeli strike that killed a Hezbollah commander in Beirut and the killing of the political leader of Hamas in Tehran "don't help" regional tensions but there are no signs of an imminent wider conflict, the White House said Wednesday.

"These reports over the last 24, 48 hours certainly don't help with the temperature going down," National Security Council spokesman John Kirby told reporters when asked about the attacks.

"We're obviously concerned about escalation."

Hezbollah on Wednesday mourned its top commander Fuad Shukr, whose body was recovered from the rubble of an Israeli strike in south Beirut, as fears mounted of a wider conflict.

Shukr will be buried on Thursday and Hezbollah leader Hassan Nasrallah will speak at his funeral to outline the Iran-backed movement's position, the group said in a statement.

Shukr was "martyred on the road to Jerusalem", Hezbollah said, using a phrase referring to fighters killed by Israel, and described him as one of the "major symbols of the resistance" against Israel.

Hundreds of mourners on Wednesday chanted "death to Israel" and "America is the Great Satan" at the funeral of two children killed in an Israeli strike on Hezbollah's stronghold in southern Beirut the day before.

The Israeli military said the strike had "eliminated" Fuad Shukr, a top Hezbollah commander it blamed for carrying out a weekend rocket attack on the Israeli-annexed Golan Heights that killed 12 children.

Concerns grew among Israelis on Wednesday over the fate of dozens of hostages still held captive in Gaza following the killing of Hamas chief Ismail Haniyeh in Tehran.

Haniyeh's killing "was a mistake as it threatens the possibility of having a hostage deal," said Anat Noy, a resident of the coastal city of Haifa, in her 50s.

"We woke up today with a sense of fear in our hearts that this can escalate even more. There is no calm... we are afraid."

Pakistan said Wednesday the killing of Hamas's political leader in an air strike in neighbouring Iran blamed on Israel was a "reckless act", while hundreds of supporters of an Islamist party held a symbolic funeral near Islamabad.

Describing the assassination of Ismail Haniyeh as "terrorism", Islamabad's foreign ministry said in a statement that "Pakistan views with serious concern the growing Israeli adventurism in the region."

"Its latest acts constitute a dangerous escalation in an already volatile region and undermine efforts for peace", it said.

The killing of Hamas leader Ismail Haniyeh in an air strike in Tehran Wednesday came as a "thunderbolt" to war-weary Gazans, with some expressing disappointment Iran was unable to "protect him".

"This news is like a thunderbolt, something unbelievable," said Wael Qudayh, 35, a resident of the central city of Deir al-Balah.

On Wednesday, Hamas and the Iranian Revolutionary Guards announced that Haniyeh had been killed in Tehran in an Israeli air strike.

He was in the Iranian capital to attend the swearing-in on Tuesday of President Masoud Pezeshkian.

The killing of Hamas political leader Ismail Haniyeh in an air strike in Tehran on Wednesday blamed on Israel has stunned the international community.

Israel has not commented on the death but many countries have warned that it could help turn the Gaza war into a regional conflict.

Here are some key reactions:

- Iran leader vows 'harsh punishment' -

Haniyeh had been in Tehran to attend the inauguration of President Masoud Pezeshkian and Iran's supreme leader Ayatollah Ali Khamenei vowed "harsh punishment" for Israel.