A search by police and the army is now under way around Bat Ayin
A Palestinian attacker wielding an axe has killed an Israeli boy and wounded another in a Jewish settlement in the West Bank, police say.
The incident took place in the Bat Ayin settlement south of Bethlehem. The attacker is reported to have escaped.
Doctors said the fatality was a 13-year-old, Shlomo Nativ, while a seven-year-old boy suffered serious wounds.
The military wing of Islamic Jihad and Imad Mughniyeh Group said they carried out the attack, Israel Radio reports.
Israeli Prime Minister Benjamin Netanyahu described the attack as a "senseless act of brutality against innocents".
Reports say it appears to be the latest of sporadic attacks by Palestinians in Israeli-occupied territory.
It is also the first such incident since the right-leaning government of Prime Minister Netanyahu took office.
There are fears that the killing could heighten tensions between the Israeli cabinet and the Palestinians.
Mr Netanyahu's foreign minister has declared his government will abandon the Annapolis agreement and go back to the so-called roadmap for peace.
According to the roadmap, the Palestinians first have to take a number of steps on security before going on to solve the final issues involved in creating their own state, the BBC's Paul Wood in Jerusalem says.
Israeli TV reported that the attacker was a local Palestinian.
A massive search by police and the army is now under way around Bat Ayin, which is inhabited by about 1,000 religious settlers.
Settler leader Shaul Goldstein said security guards managed to shoot the attacker, but he escaped.
One witness, who said his name was Avinoam, described trying to wrestle the man.
"I was near the settlement offices when I saw a Palestinian with an axe running toward me," he told Israeli television.
"I managed to block his arm, we fell to the ground and struggled but he managed to run away.
"I called for help, another resident fired at him, but missed.
"When I got up, I saw a child wounded in the head. I cried to warn his mother, who ran toward him," he said.
More than 400,000 Jewish settlers live in the West Bank and East Jerusalem, areas which were captured by Israeli in the 1967 war.
All Jewish settlements in the Palestinian territory are regarded as illegal under international law, although Israel disputes this.