The Israeli army said that three armed men took over a house near the settlement and that at least one of the three was killed in a gun battle with Israeli troops, Reuters reported.
Israeli radio said there were no Israeli casualties.
A military source said the three men had opened fire with anti-tank weapons and small arms at houses in the settlement.
The gun battle with Israeli forces lasted several minutes.
West Bank raid
In the West Bank, Israeli occupation forces launched an operation in the village of Syda, north of Tulkarim, and arrested four Palestinians, Aljazeera's correspondent reported.
In the Balata refugee camp, east of Nablus, three Palestinians were wounded by Israeli gunfire and seven others arrested on Friday.
The clashes on Friday further strained a shaky three-month truce and came one day after Israeli Defence Minister Shaul Mofaz ordered the army to use all necessary means to strike Gaza fighters who have fired rockets and mortars at Israeli settlements in recent days.