Five Palestinians have been killed in a gunfight with Israeli troops in Tulkarm refugee camp in the West Bank.
Palestinian witnesses said some of the Tulkarm victims were unarmed
The Israeli military said the dead men were wanted in connection with suicide bombings in Israel.
Earlier, a British Orthodox Jewish man was stabbed to death in Jerusalem, allegedly by a Palestinian man.
The violence is the first since Israeli forces completed the withdrawal of Jewish settlers from Gaza and part of the West Bank.
An Israeli military source said the five dead in Tulkarm were all wanted for two suicide bombings in Israel this year.
However, Palestinian witnesses quoted by Reuters news agency said three of them were unarmed teenagers, while two were militants, one from the al-Aqsa Martyrs Brigades and one from Islamic Jihad.
An Islamic Jihad spokesman said revenge was inevitable and it would teach Israel "an unforgettable lesson".
Palestinian leader Mahmoud Abbas accused Israel of seeking to destroy the prospects of peace and a shaky unofficial ceasefire currently being maintained by militant groups.
"We strongly condemn this crime and the Israeli side will be responsible for any consequences," he said in a statement.
Palestinian militants later fired a home-made rocket at the Israeli town of Sderot just outside the Gaza Strip, but did not cause any casualties.
In Jerusalem, an Orthodox Jew was knifed to death in the Old City, in what police described as a terrorist attack.
The Jerusalem stabbing comes after a period of relative calm there
The dead man has been identified by the British Foreign Office as 21-year-old Shmuel Mett. Another Briton, Sammy Weisberg, was injured in the attack and is in hospital.
Israeli media quoted witnesses as saying the attacker was Palestinian.
Police said he fled the scene carrying a kitchen knife.
The stabbing ended a long period of relative calm in Jerusalem, whose eastern half, including the Old City, has a large Palestinian population and was captured by Israel in 1967.
The incident has raised tensions in Israel, says BBC correspondent Jim Fish.
Israeli radio said dozens of Orthodox Jews gathered in a Jerusalem square and threw stones at the police after news of the murder broke.
In a separate development, a mortar shell was reportedly fired from Lebanon at northern Israel.
Israeli police said the shell landed on a chicken coop in the town of Margaliot, but injured no-one.
The unrest comes a day after Israeli forces completed the removal of Jewish settlers from the Gaza Strip and a number of settlements in the West Bank.