In my experience there are three kinds of parents, those that care what there kids do, and those who feel kids will do what kids do, and those who feel their kids will do what they will do and encourge them to do something that they really is not needed. Kids get into arguements yes, to to encourage them to physically assult them is uncalled for. I do think you should confront the parent and ask why would you encourage such a thing. It is not something I approve in my home. Yes, they do fight, but why would you encourage your daughter to punch my daughter. It makes me wonder what goes on behind closed doors, when your daughter is visiting. I by no means encourage my children to physically assult someone. I have given them permission to defend themselves. I tell my children to walk away from anything that looks like it might become violent. If your Neighbor is encouraging her daughter to "punch" your daughter, and when you confront her/him, see how they react to you informing them that it is not appreciated. You might want to consider if she is the good neighbor you allow your children to hang around on a daily or weekly bases. When you allow something to go on that you do not approve of, you are allowing it to come into your home. My husband and I have made the agreement that if we don't approve, than it should not enter our home, from the T.V. to children who can not behave themselves. There are children who go to our church, that I would not allow my children to play or associate with due to the attitude they have, and the constant disobeying of there parents. If I allowed them to play together, my children will learn that behavior. I know because I had to deal with many situations in regards to my children, before we took control of our house hold. Well I did not mean to make this long, but I would look into why my neighbor would encourage such a thing, and why she thought it would be ok. Talk to your daughter as well, what kid of friend does she really have???.....(She maybe a good friend, I just asking). Look for warning signs...Does your daughter imitate a behavior of her friend? Is it a good behavior? Ok, sorry again for such a long letter.
Good luck
T. D