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Palestinian Shot Dead After Crash Israel Labels Terrorist Attack

A Palestinian driver has been shot dead in Jerusalem after allegedly slamming his tractor into a police car and a bus. The killing happened as tensions flare over Israel's planned demolition of Arab homes in East Jerusalem and a spate of new violence in Gaza.

It was a scene of chaos on Jerusalem's busy Menachim Begin Highway in the moments after police said the Palestinian driver of a large construction vehicle smashed the front-end loader into a police car and a bus.

An Israeli cab driver told Israel Radio he pulled a gun and opened fire on the Palestinian.

He said he saw a terrorist act, and saw the police car fly into the air. He said he got out of his car with his gun. He said he fired four shots and killed the man. Then, he said, a policeman came and "finished the man off."

Police and hospital officials said the man died from his wounds. The officers inside the car sustained minor injuries.

Police said they found a copy of the Muslim holy book, the Koran, open in the vehicle - something Israeli authorities in the past have associated with attacks by Muslim extremists.

No one has claimed responsibility for the crash.

Officials are probing the circumstances surrounding the incident, but Israeli authorities quickly labeled it an act of terrorism.

Jerusalem Mayor Nir Barkat went on television shortly after and called it "an attack to murder innocent people."

He said he wants the authorities to take the harshest measures allowed by law against the attackers and those who helped them.He said he would push for the home of the attacker to be demolished immediately - a response Israeli authorities commonly give after terrorist attacks.

It was the third incident in eight months involving a Palestinian construction worker in Israel.

Tensions remain high due to Israel's plans to demolish scores of Arab homes built without permits in East Jerusalem to make way for an archeological zone.

Eighty kilometers away from Jerusalem, in the Gaza Strip, a new round of Israeli air strikes killed at least two Palestinians. Israeli officials said those killed were members of the militant Islamic Jihad group who had fired an anti-tank missile across the border at Israeli soldiers.