* Hamas source says group's training facilities hit
* Israeli military says 14 rockets fired into Israel
* Tensions high in Jerusalem over Palestinian teen's killing
By Jeffrey Heller
JERUSALEM, July 3 (Reuters) - Israeli air strikes wounded 15 people in the Gaza Strip on Thursday, local residents said, and militants kept up rocket fire on Israel, damaging two homes, in rising border tensions following the death of a Palestinian youth.
Violent Arab protests erupted on Wednesday after the body of the 16-year-old Palestinian boy was discovered in Jerusalem, possibly the victim of a revenge killing following the deaths of three Israeli teenagers that the Jewish state has blamed on Hamas militants in the occupied West Bank.
The city was quiet on Thursday but tensions remained high as police continued an investigation into the Palestinian's death.
The Israeli air strikes hit at least three Hamas training facilities in Gaza, said a source in the Islamist group, which dominates the Palestinian enclave.
The Israeli military said 14 projectiles had been fired at Israel from the Gaza Strip and that rockets that struck the two homes in the southern town of Sderot caused no casualties.
U.N. human rights chief Navi Pillay condemned both Palestinians and Israelis on Thursday for the latest flare-up of violence across the Gaza border and also the killing of the Palestinian teenager.
""From a human rights point of view, I utterly condemn these rocket attacks and more especially I condemn Israel's excessive acts of retaliation," Pillay told journalists in Vienna.
Israel's security cabinet met again late on Wednesday to mull military options in response to the persistent rocket fire from the Gaza Strip over the past several weeks, but there was no official word that any decisions had been made amid public calls from some ministers for strong action.
The Palestinian youth, Mohammed Abu Khudair, was last seen alive being bundled into a van on Wednesday near his home in the Arab neighbourhood of Shuafat in Jerusalem, a day after the burials of the Jewish teens, who were abducted on June 12.
No time has been set for the boy's funeral, an event that could trigger more Palestinian protests.
Abu Khudair's family said police, who have stepped up patrols in the city, told them the body would be released in the pre-dawn hours of Friday.
A police spokeswoman gave no details of the investigation, other than to say a forensic examination was still underway. She declined to say when the body would be handed over.
Palestinian President Mahmoud Abbas, who accused Jewish settlers of killing the teenager, spoke by telephone with the youth's father on Thursday.
"Mohammed is one of the martyrs of this great people," Abbas said, according to the official Palestinian news agency, WAFA.
Israeli Prime Minister Benjamin Netanyahu, in a statement on Wednesday, called the killing a "loathsome murder" and urged all sides not to take the law into their own hands.
The killing of Abu Khudair also drew international condemnation and the United States urged Abbas's Palestinian Authority to "take all necessary steps to prevent an atmosphere of revenge and retribution".
(Additional reporting by Nidal al-Mughrabi in Gaza; Editing by Gareth Jones)