Let out of their homes on Saturday for the first time in three days to buy supplies, Palestinian youths threw stones at the Israeli tanks and armoured vehicles patrolling the city's streets.
Sixteen Palestinians were wounded by rubber-covered bullets and another was hit by a live round during the confrontation, Palestinian hospital sources said.
An Israeli military spokesman confirmed the running clashes through the streets. He said the soldiers had employed "anti-riot weapons" against the stone-throwers.
The army was conducting search operations in Nablus, where it earlier arrested three Palestinians suspected of being involved in anti-Israeli attacks, a military source said.
A curfew was also imposed on Jenin, following clashes between Israeli tanks and Palestinian children throwing stones
The Israeli army on Thursday launched a major operation around Nablus involving scores of troops, tanks and an assault helicopter following a massive bus bombing in Jerusalem two days earlier which killed 20 people.
The bombing, claimed by Hamas, was in retaliation for continuing Israeli attacks against Palestinian political and resistance figures and civilians.
A curfew was also imposed on the West Bank town of Jenin, scene of repeated Israeli incursions, following similar clashes between Israeli tanks and young stone-throwers, Aljazeera reported.
One died in hospital shooting
Meanwhile, Palestinian medics said that one Palestinian fighter had been killed when Israeli troops opened fire at a hospital in Nablus the previous day.
Palestinian witnesses said on Friday that three guerrillas had been killed by Israeli troops. But hospital officials on Saturday said that in fact one had been killed while the other two were wounded.
One of the fighters was seriously wounded and the other was moderately hurt, officials at Rafidya hospital said. The three belonged to the al-Aqsa Martyrs Brigades, an armed offshoot of Palestinian President Yasir Arafat's Fatah movement.
The incident occurred when Israeli soldiers pursued the three men onto the rooftop of Rafidya hospital. Soldiers fired at them igniting a gunfight in which one Palestinian was killed.