Israeli Zaka emergency service said on Wednesday that at least three people had also been wounded in the attack near the Jewish settlement of Shiloh in the West Bank. 

Israeli and Palestinian medics said the man grabbed a weapon from a security guard posted at the industrial zone of the West Bank settlement of Shilo, then randomly opened fire on Palestinians nearby.

Media reports said he opened fire in an attempt to disrupt the Gaza pullout, but the reports could not immediately be confirmed.

'Jewish terror'

Israeli Prime Minister Ariel Sharon condemned the shooting of as an act of "Jewish terror" aimed at stopping the Gaza pullout.

Sharon said the shooting was "aimed against innocent Palestinians, out of twisted thinking, aimed at stopping
the disengagement."

Israeli media reported that the man was a driver who transported Palestinian labourers to the industrial zone every day and knew his victims.

At the end of Wednesday's work day, the driver picked up the workers and stopped at the security post briefly, media reports said.

The driver got out of the car, took the weapon from the security guard at knifepoint and then opened fire on the workers from close range, the reports said.

Two workers were killed on the spot. The reports said the
driver then took one of the wounded to another area and
shot him dead at close range.

Israeli media reported that the man was arrested, while the Israeli military had no comment on the incident.

Palestinian reactions

Palestinian President Mahmoud Abbas, who has urged his people to ensure the Gaza pullout takes place free of violence, called for restraint in the aftermath of the shooting.

Sharon described the shooting as
an act of Jewish terror

In a statement, he called the incident at Shiloh settlement in the West Bank "a terrorist incident" meant to sabotage Israel's pullout from Gaza, home to 1.4 million Palestinians.
   
"President Abbas called upon the Palestinian public not to respond to provocations and not to provide any pretexts or excuses to those wishing to halt the Israeli withdrawal from Gaza," the statement said.

Palestinian government spokesman Saeb Erikat condemned the attack and urged the Israeli government to bring the perpetrator to justice immediately.

Hamas vowed revenge, raising fears that the violence could quickly escalate.

In Gaza, Hamas spokesman Mushir al-Masri vowed that "this crime is not going to pass without tough punishment. The enemy is opening the gate of revenge."

However, he also indicated the group might not want to disrupt the Gaza pullout by inviting Israeli retaliation.

"No one of us wants the occupation to stay or to obstruct their pulling out, but in the face of this series of crimes ... all options are open," he said.

Palestinian attacks

Palestinians fired a mortar shell at an Israeli army post near the Gaza Strip settlement of Morag on Wednesday where troops are taking part in the evacuation of settlers.

"Palestinians fired a mortar shell near an IDF (Israel Defence Forces) post where soldiers were securing the community of Morag," military sources said on Wednesday, adding there were no reports of injuries.

"No one of us wants the occupation to stay or to obstruct their pulling out, but in the face of this series of crimes ... all options are open"

Mushir al-Masri,
Hamas spokesman

Shortly afterwards, Israeli radio reported that Palestinian fighters and Israeli troops traded fire in the area around the radical Jewish settlement of Kfar Darom and the neighbouring Palestinian town of Deir al-Balah.

There was no immediately confirmation from the army.

In the early hours of Thursday, Palestinians fired two mortar bombs at a Jewish settlement that Israel plans to evacuate, but caused no casualties or damage, the Israeli army said.

Israel has vowed not to allow Palestinian fighters to disrupt its pullout. About 7500 Palestinians have deployed near Jewish enclaves to stop fighters.

Palestinians confirmed hearing the explosions, which occurred near the Gadid enclave in Gaza.

Hours earlier, Israeli forces found a bomb belt near settlements that a security source said a Palestinian fighter intended to use to kill Israelis. 
 
Opponents of Israel's Gaza pullout also briefly blocked a road to the main settlements on Wednesday, complicating the army's efforts to carry out forced evacuations.

The incidents are likely to raise tensions at a time when Israel hopes to complete a Gaza pullout without any fire from Palestinians.