Two Hamas militants and an Israeli soldier were killed in a raid on a West Bank refugee camp today jeopardising the month-long ceasefire.
Violence also flared along Israel's northern border when Lebanese Hizbollah attacked Israeli army posts in the disputed Shebaa Farms area for the first time in seven months.
In the West Bank town of Nablus, medics said two other Palestinians died in protests following the raid. A 20-year-old man was shot dead by troops and a 41-year-old bystander died after inhaling tear gas sprayed by soldiers attempting to control rioters.
Senior Hamas political leader Mr Abdel Aziz al-Rantissi told said the organisation would react to the Nablus incursion but said it stood by a three-month truce declared on June 29th in keeping with a US-backed Middle East peace plan.
"We are still committed to the hudna[ceasefire] but the violation by the Israelis will not pass without a reaction. There will be a reaction to each Israeli violation," he said.
An Israeli field commander, who could only be identified under army regulations only as Col Harel, said the raid was aimed at arresting two senior Hamas men the army said were planning attacks on Israelis.
Col Harel said troops came under fire after calling on occupants in a building to come out. Residents heeded the call; the militants did not.
During the exchange of fire, an explosive charge or an explosives-making workshop blew up, the officer said. Witnesses said the blast caused the top floor of the three-storey building to collapse.
The army then blew up the rest of the structure. Local residents said eight families were made homeless.
Israeli-Palestinian violence has subsided dramatically since the truce began 33 months into a Palestinian uprising against Israel in pursuit of statehood in the West Bank and Gaza Strip. Meanwhile, the Israeli army warned Syria and Lebanon to restrain Hizbollah after they anti-tank missiles and mortar bombs to attack Israeli army posts in the disputed Shebaa Farms.
Hizbollah said more attacks could be on the way.
"I believe that the Syrian and Lebanese governments must understand that this instrument named Hizbollah is very, very dangerous, especially for them," Maj Gen Beni Gantz, head of Israel's northern command, said.
Issuing a veiled threat of military action, he said in a telephone interview: "I don't think I have to chase the organisation. I have to chase the master." He said Israel held Syria and Lebanon responsible for reining in the guerrillas.