Six Palestinians have been killed by Israeli forces in the deadliest violence in months.
Dozens of jeeps carrying masked Israeli commandos rolled into the West Bank town of Nablus before dawn and surrounded the homes of three Palestinian gunmen. After a standoff, troops stormed inside and killed the wanted men.
The army said they were known militants who carried out a roadside ambush that killed a Jewish settler on Thursday. Palestinian officials said they were members of the Al-Aqsa Martyrs Brigade, the armed wing of the Fatah movement headed by western-backed Palestinian President Mahmoud Abbas.
The Al-Aqsa Brigades carried out many deadly attacks on Israelis during the second Palestinian uprising that erupted in 2000. But the group has been largely inactive since 2005, when Mr. Abbas was elected on a platform of reaching a negotiated peace with Israel.
Palestinian spokesman Nabil Abu Rdeineh condemned the Israeli raid.
"The policy of assassination, the policy of escalation from the Israeli side is ruining every chance of peace," he said.
Thousands of Palestinians attended the funeral of the gunmen in Nablus.
The Al-Aqsa Brigade threatened revenge, raising the specter of an escalation of violence.
In the Gaza Strip, three Palestinians who approached the border fence were killed in an Israeli air strike. The military said they were in an unauthorized area and suspected of trying to infiltrate Israel. Palestinian officials said they were unarmed civilians who were searching for scrap metal.
The upsurge in violence came a day before the first anniversary of the Gaza War, in which more than 1,100 Palestinians and 13 Israelis were killed.