Israeli forces arrested about 300 suspected Islamic militants in the West Bank after rocket attacks from the Gaza Strip.
Hamas is at a critical point as it takes on President Mahmoud Abbas' Fatah in the hope of political gains while remaining the most powerful armed faction behind bombings and rocket salvos in the Palestinian resistance.
Spokesman Sami Abu Zuhri said on Tuesday that Hamas' prospects had been damaged by Israel's arrest of candidates for local elections on Thursday and a January parliamentary vote in a round up of members.
"Arrests included not only candidates, but also leaders who are supposed to supervise the preparations and the election process," Abu Zuhri said in the Gaza Strip.
The local election committee said 27 candidates for Thursday's local poll in parts of the West Bank had been arrested.
Israel does not want Hamas, sworn to destroying the Jewish state, to contest parliamentary elections, and Prime Minister Ariel Sharon has said Tel Aviv could hamper voting if it does.
"The idea is to hurt Hamas command and control"
Foreign Ministry spokesman
But Israeli officials said the arrests were purely for security reasons after the worst bloodshed since Israeli troops left the Gaza Strip on 12 September after 38 years of occupation.
"The idea is to hurt Hamas' command and control," said Foreign Ministry spokesman Mark Regev. "Israel is acting against Hamas because it is a brutal terrorist organisation."
Violence surged after an explosion on Friday at a Hamas rally killed 21 people. Hamas accused Israel, which denied involvement.
The Palestinian Authority blamed Hamas for mishandling explosives and released a forensic report on Tuesday saying shrapnel found in the bodies of victims came from Hamas' own rockets.
Hamas has now said it would stop attacks from Gaza but claimed responsibility on Tuesday for killing an Israeli in the West Bank. Israel has continued air strikes on Gaza and vowed to press ahead if any factions carry out rocket attacks.
Palestinian analysts said Hamas' decision to return to a truce it largely respected since February was prompted partly by fears it could suffer politically from anger among those who disbelieved its account of the explosion at the parade.
Hamas has the support of about
one third of Palestinians
"The decision [to halt attacks] implied a confession of responsibility," said political analyst Hani Habib. "It seemed the Palestinian public did not accept Hamas' justifications in the usual way."
Hamas has continued its war of words with the Palestinian Authority over the deadly explosion, though, accusing it of trying to reap political gains and standing by while Israel arrested Hamas members.
"This is unjustified," said top Palestinian negotiator Saeb Erikat. "The Palestinian Authority has condemned the Israeli attacks, the assassinations and the arrests."
Palestinian President Mahmoud Abbas has shied away from disarming Hamas and other armed groups, a process the Palestinians promised to start under a US-backed peace "road map" and which Israel demands as a condition for statehood talks.
But Abbas has said that after the January elections, Hamas will no longer be able to justify keeping a militia.
Hamas made a strong showing in local elections early this year, and opinion polls show it has the support of about one third of Palestinians.