Israeli and Palestinian security chiefs held talks today to discuss ways of quelling the ongoing bloodshed as a new Saudi peace initiative gained momentum with US and European interest.
But the latest moves to calm the Middle East conflict, including an offer by Israeli Prime Minister Ariel Sharon for a meeting with Saudi officials, were marred by fresh violence.
Israeli troops shot dead a 25-year-old Palestinian overnight during an exchange of fire with gunmen at the Balata refugee camp near the West Bank city of Nablus.
Several hours later, a Palestinian man shot dead an Israeli at a factory on the outskirts of north Jerusalem and fled the scene, Israeli police said.
Israeli forces also raided a Palestinian village near the West Bank city of Hebron overnight, wounding five Palestinians after coming under fire from gunmen, Palestinian security sources said. Troops withdrew about six hours later.
Diplomatic sources said the resumption of US mediated security talks was a positive sign the two sides were looking for ways to achieve a lasting cease-fire.
But Israel's Army Radio said no progress was made during the meeting, which started last night and lasted into the early hours of his morning.
A previous session had been called off earlier this week due to Palestinian anger over an Israeli decision to keep Palestinian President Yasser Arafat confined to Ramallah.
A surprise peace initiative by Saudi Crown Prince Abdullah picked up speed yesterday with praise from President Bush for its vision of Israeli-Arab normalization.
European Union foreign policy chief Mr Javier Solana cut short a visit to Israel and the Palestinian territories and planned to go to Saudi Arabia today to discuss the proposal.
The initiative calls for Israel to withdraw from lands it occupied in the 1967 Middle East war in return for Arab recognition of the Jewish state.