Israeli troops have raided the Palestinian-controlled city of Nablus in the West Bank, arresting at least two militants.
Backed by combat helicopters, Israeli tanks, armored personnel carriers and infantry thrust into Nablus and the nearby Balata refugee camp.
Soldiers clamped a curfew on the area and conducted house-to-house searches for weapons, explosives and militants. Palestinians say among those arrested was the leader of Chairman Yasser Arafat's Fatah faction in Nablus, Issam Abu Bakr.
The Balata camp is known as a stronghold of the Al-Aqsa Martyrs Brigades, a militant group linked to Fatah. The group has claimed responsibility for recent suicide bombings and shootings of Israelis.
This week the Al-Aqsa group says its members carried out a number of attacks, including an infiltration of a Jewish settlement that left three Israeli teenagers dead and a suicide bombing near Tel Aviv that killed an Israeli woman and her granddaughter.
In recent weeks, Israeli forces have been staging quick raids into Palestinian towns and villages, mounting operations that last from a few hours to several days.
Near Nablus a Palestinian gunman was shot and killed after infiltrating the Jewish settlement of Shavei Shomron. The army says the gunman entered the settlement armed with an automatic weapon and hand grenades.
The continuing violence comes amid intense diplomatic efforts by the international community to revive the Middle East peace process.
U.S. Assistant Secretary of State William Burns is continuing his mission to the region, holding meetings with top Israeli officials, including Prime Minister Ariel Sharon and Foreign Minister Shimon Peres.
Mr. Burns says he is in the region to renew a serious political process and support Palestinian efforts to build strong institutions in preparation for statehood.
Following a meeting with Mr. Arafat the U.S. diplomat said "it is time to restore hope" after more than 20-months of conflict between Israel and the Palestinians.
The director of the U.S. Central Intelligence Agency, George Tenet, is scheduled to meet with both sides in the coming days and is expected to focus on helping the Palestinian Authority reform its security services.