Gunman opens fire in Jerusalem

Police say the shooting came after a financial dispute

A Palestinian man has opened fire with a pistol on passers-by in a busy commercial district in southern Jerusalem, before being shot dead by an Israeli soldier at the scene, police said.

The shooting, in which four people were wounded, was over a financial dispute between the assailant, a West Bank resident who worked at a car repair shop in the neighbourhood, and the garage owner, Jerusalem police chief Micky Levy said.

"This may very well be a criminal act," he was quoted as saying by Israel's Army Radio.

The incident comes at a time of extreme tension, with Israeli forces tightening their grip on six Palestinian towns in the West Bank following last week's assassination of right-wing Israeli Tourism Minister, Rehavam Zeevi.

Paramedics said four bystanders were wounded, two seriously.

Jerusalem Mayor Ehud Olmert told Army Radio that the city was working on a plan to limit the entry of Palestinians from the territories into Israel.

"We're doing everything we can, the security forces are doing everything, the government is doing everything," Mr Olmert said.

"There is great pressure on the government to restrain from doing some of the things it is doing, but it is continuing to do them."