Israeli forces backed by dozens of tanks and armoured personnel carriers have swept into Nablus this morning in an apparent hunt for Palestinian militants.
Witnesses say missile fire rocked houses as soldiers stormed into the historic centre of the northern West Bank city, arresting about 30 wanted militants.
"The intense activity is a direct result of a high volume of alerts and attempts to conduct terror attacks against Israelis," the Israeli army said in a statement.
The army said it traded fire with militants in the operation. There are no immediate reports of injuries.
Witnesses say as many as 100 tanks and armoured personnel carriers are taking part in the operation. The soldiers fired missiles and machine guns and met little resistance in the raid.
Israel has threatened a tough response to Sunday's shooting at a communal farm, Kibbutz Metzer, in northern Israel, where the dead included a mother and her two young sons.
Israeli helicopters have also fired four missiles on a suspected weapons-making workshop in downtown Gaza City, the second such strike on the site in two days, Israeli and Palestinian officials said.
The attack demolished a car repair shop that had been severely damaged in a similar pre-dawn attack on Monday. The shop was empty at the time, and there were no reports of casualties.
The military operations come a day after Israeli Foreign Minister Mr Benjamin Netanyahu said if he becomes prime minister in January elections his "first order of business" would be to exile Palestinian leader Mr Yasser Arafat.
The remarks put Mr Netanyahu at odds with his boss, Prime Minister Ariel Sharon, who has sought to marginalise Mr Arafat and who he is challenging for the leadership of the party.
PA