A Palestinian gunmen wounded at least 10 people in downtown Tel Aviv in the first such attack in the heart of Israel since the start of clashes last September. Later, an Israeli helicopter rocket attack killed Amer Hudeiri, a member of the militant Palestinian Hamas movement, in his car in the West Bank.
The gunman opened fire with an automatic rifle from a passing car outside Israel's Defense Ministry, as dozens of soldiers headed out of the complex of buildings for lunch at midday.
An Israeli traffic policeman wounded the gunman, a Palestinian from East Jerusalem. The gunman crashed his car and was in the hospital under police guard.
An Israeli soldier described what happened: "Me and my friends were walking down the street," he said. "We went out of the base, and suddenly he started shooting. Bullets were flying and everyone started falling down."
Raanan Gissin, a spokesman for Israeli Prime Minister Ariel Sharon, says that it is time for the international community to demand that Palestinian leader Yasser Arafat halt such attacks before the situation gets out of hand.
"The United States and the European countries must present a solid wall in which they demand unequivocally and put the pressure on Mr. Arafat to stop all forms of hostilities, violence and incitement," said Mr. Gissin. "Otherwise, we are going to see an increase in the level of violence."
But Palestinian Cabinet Minister Saeb Erekat says the finger of blame should be pointing toward Israel, which he claims has escalated the violence through its policy of assassinating Palestinian activists.
"I think that is hallucination [that the Palestinians are to blame]," he said. "Violence will be violence. The Israeli government is fully responsible for the deterioration that is taking place now."
The Palestinian leadership sees the latest escalation in violence as a response to what they insist was an attempt on Saturday by the Israeli army to kill Marwan Barghouti, the West Bank leader of the Fatah faction of the Palestine Liberation Organization. Mr. Barghouti narrowly escaped death when Israeli missiles hit cars travelling in his convoy in the West Bank.
Israeli Cabinet Minister Ruby Rivlin says the army was not attempting to assassinate him, but rather one of his bodyguards, who is alleged to have been involved in a series of terrorist attacks, including the killing of Jewish settlers in the West Bank.
"Mr. Barghouti was not the target of the attack in Ramallah, although he is one of the most crucial leaders and has the most hostility against Israel," he said.
But Palestinian Cabinet Minister Yasser Abed Rabbo rejects such assurances. "These Israeli war crimes invite, in this case, retaliation," he said. "And any retaliation is the responsibility of the Israeli government."
At the same time, Israeli Prime Minister Ariel Sharon said Israel would continue tracking and killing suspected terrorists.
The fighting has raged on despite a U.S.-brokered cease-fire in June and now shows signs of another dangerous escalation. More than 650 people have been killed and thousands more wounded in the conflict.