Israeli troops, erecting a makeshift roadblock at the northern entrance to Hebron, shot and killed Iyad Eid Dwaik, 30, after he hit an Israeli soldier in what witnesses and relatives said was a traffic accident.
Palestinian witnesses said a taxi driver ran over the Israeli after dark at a dimly lit checkpoint near the West Bank city of Hebron, killing him.
They said Israeli soldiers later shot the driver dead. Dwaik was riddled with bullets before he was transferred to a nearby Palestinian hospital where he was pronounced dead.
"The soldiers set up a surprise roadblock and some soldiers were standing right in the middle of the road. He simply couldn't stop his car at a few second's notice," said relative Basim Dwaik.
"They murdered him before even asking any questions," he told Aljazeera.net.
"The soldiers set up a surprise roadblock and some soldiers were standing right in the middle of the road. He simply couldn't stop his car at a few second's notice"
Basim Dwaik, relative of killed taxi driver Iyad Eid Dwaik
The Israeli occupation army said an Israeli reservist soldier was killed in the incident.
An army spokesman said soldiers were not sure if the incident was a traffic accident or a "terrorist act". The army was investigating the incident, he added.
Israel Radio said no weapon was found in the Palestinian car, and the driver had no known links to resistance groups.
The latest killings come as thousands of Jewish settlers converged on downtown Hebron to inaugurate a new Jewish settlement outpost in the heart of the Arab town.
Seven ultra-orthodox Jewish settler families moved to the new apartment complex at Tel Rumeida, in the heart of the old town.
The settlers are reportedly affiliated with the Jewish Gush Emunim movement, which advocates the expulsion of non-Jews from Israel and the Palestinian territories.
Monday's deaths also come as Abbas, under international and Israeli pressure to reform corruption-plagued security forces, ordered new commanders to halt growing chaos two days after he pushed aside top officers from the late Yasir Arafat's old guard.
"I cannot say that we have accomplished safety, security and reform for our people so far. But we have begun an important process," Abbas said before meeting the new security chiefs in the Gaza Strip.