At least 26 people have been killed in a day of violence between Israel and the Palestinians, dashing renewed hopes for peace between the two sides.
The attack happened during rush-hour
In Jerusalem, at least 16 people were killed when a Palestinian militant dressed as an Orthodox Jew blew himself up on board a bus in the city centre.
Minutes later, Israeli helicopter gunships blasted a car carrying two Palestinian militants in Gaza, killing the occupants and at least five bystanders, and a later attack caused two more deaths.
The bloodshed was the worst since Israel and the Palestinians publicly endorsed a US-backed peace plan, known as the roadmap, at a summit in Jordan one week ago.
ROADMAP'S PATH TO CRISIS
4 June: US-Jordanian-Israeli summit in Aqaba
8 June: Hamas attacks Gaza army base, kills four soldiers
10 June: Israeli attempt to kill Hamas leader Rantissi
11 June: Suicide attack on Jerusalem bus; Israeli missile strike on Gaza
In the day's second Israeli helicopter attack, just after midnight local time (2100 GMT), a rocket was fired at what the Israeli military said were militants preparing to launch a mortar shell at the
nearby Jewish settlement of Netzarim.
At least two people were killed in the strike, which came within six hours of the attack on the militants' car.
US President George W Bush said he "strongly condemned" the Jerusalem bombing, and called on "all of the free world" to help prevent further killings.
The armed wing of the Palestinian militant group Hamas, which carried out the bus attack, rejected calls by Palestinian Prime Minister Mahmoud Abbas - also known as Abu Mazen - and Palestinian leader Yasser Arafat for a ceasefire.
Israeli police said the bomber blew himself up in the aisle of the number 14 bus on Jaffa Street at the height of the evening rush-hour.
The device was packed with nails and metal fragments, designed to cause maximum damage, police said.
Ten people including the bomber were killed on the bus, while another seven died on the street outside.
One witness told Israel radio: "The bus was torn to shreds. There was a massive blast, it's a horrific scene."
The BBC's James Reynolds, who went to the scene of the blast, said there was a very angry mood among hundreds of people who had gathered there.
The Palestinian prime minister condemned what he described as a "terrorist attack".
Israel was braced for such an attack after Hamas vowed revenge for the attempted killing of its political leader Abdel-Aziz al-Rantissi by Israel in Gaza on Tuesday.
As Israel reeled from the bus attack, Israeli helicopter gunships fired at least two missiles at a car carrying two Palestinian militants in the eastern Gaza neighbourhood of Shajayah.
Palestinian hospital sources said a senior member of Hamas, Tito Massoud, and another Hamas member were killed, as well as five passers-by.
"Two missiles hit the car. I stopped my car to help them but the Israeli helicopters fired four more missiles at us," a Palestinian who was wounded in the attack told the AFP news agency.
"When they took the bodies out of the car, I cannot tell you how they looked. It was terrifying," said another eyewitness who was among the first people on the scene.
Soon afterwards hundreds of angry Palestinians crowded around the still-burning wreckage of the car, chanting for revenge.
It was the third of four Israeli missile attacks against Palestinian targets in Gaza within 48 hours.
After the latest Gaza strike, Israeli Prime Minister Ariel Sharon said Israel would "continue to pursue until the end the terrorists and those that send them".
"But," he added, "we are going to continue the political process to ensure peace and security".
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