At least sixteen people are being treated for shock and injuries in hospitals in northern Israel following an explosion in the coastal town of Hadera.

The device had been left in a rubbish bin near a bank in the town centre.

A previously unknown group calling itself the Forces of Omar al-Mukhtar says it carried out the attack.

The Israeli prime minister, Ehud Barak, condemned the attack -- the third in the area since the signing of the interim Israeli-Palestinian peace accord last September.

He said Israel was determined to act with all its might to crush terrorism. Mr Barak said last week that Israel was bracing itself for renewed attempts by Islamic militants to disrupt Middle East peace talks.

From the newsroom of the BBC World Service