Israelis have been remembering their war dead
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The funeral has taken place of Jewish settler killed in an overnight attack by Palestinian gunmen which also left his six-year-old daughter and an Israeli soldier seriously injured.
The death of Gideon Lichterman near the West Bank town of Ramallah came as the state of Israel prepared to mark its 55th anniversary.
In other incidents, two Palestinians were wounded when Israeli forces entered a refugee camp in the town of Tulkarm, Palestinian sources said.
Israeli troops have stepped up security in the West Bank and Gaza Strip ahead of Israel's festivities which begin at sundown on Tuesday and last through Wednesday.
Palestinians call Israel's creation "al naqba" - the catastrophe - and blame the Jewish state for usurping their land.
Settlements
After nightfall on Monday, Palestinian gunmen opened fire on a car in the West Bank, killing Mr Lichterman and wounding his daughter.
A 25-year-old Israeli reservist who was hitchhiking with them was also injured.
Israeli forces demolished the house of a suspected militant in Hebron
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The Al-Aqsa Martyrs Brigades, an offshoot of Palestinian leader Yasser Arafat's Fatah movement, said it carried out the ambush.
Jewish settlements and Israeli forces occupying the West Bank and Gaza Strip have been the main focus of Palestinian anger since the intifada against Israel began 31 months ago.
On Sunday, US Middle East envoy William Burns urged Israel to ease its clampdown on Palestinians and freeze the expansion of Jewish settlements.
Israeli forces maintain a stranglehold on Palestinian cities and towns across the West Bank and Gaza Strip, in an attempt to prevent attacks by militants.
In an operation on Tuesday, the Israeli army arrested a local militant leader who was accused of planning a number of attacks in the West Bank city of Hebron.
Soldiers then used bulldozers to demolish the home of Nur Jaber, said to belong to Islamic Jihad.
Mr Burns has been touring the region ahead of a visit later this week by US Secretary of State Colin Powell, as American efforts to get both sides to accept the internationally-backed "roadmap" for Middle East peace intensify.
But in a snag for peace moves, Israeli Defence Minister Shaul Mofaz has decided to suspend the dismantlement of around 10 Jewish outposts in the West Bank, the French news agency AFP reports.
There would be no dismantling until their status was clarified, a defence ministry spokeswoman said.
However, she stressed that in the end "all the illegal settlements will be dismantled."