It is not yet known how Israel will react to Sunday's attack, but some reports suggest preparations for a military response are under way.
Early on Monday, a suicide bomber blew himself up without causing any other casualties, near a police checkpoint in northern Israel.
Police believed the man was planning to target the town of Afula.
The Palestinian leadership expressed its "full condemnation for the terror attack that targeted Israeli civilians".
The last suicide attack in Netanya in March, which killed 29 Israelis celebrating Passover, provoked a fierce five-week Israeli offensive into the West Bank which has only recently ended.
The Israel Defence Forces were preparing for military action in the West Bank last night the Israeli newspaper Ha'aretz reported.
However, Israeli spokesmen said earlier that they would continue with their current policy of specific raids into Palestinian towns to root out militants, rather than conducting a broader military operation.
Election discussions
Late on Sunday, Palestinian leader Yasser Arafat met other senior officials to discuss proposals for elections in the coming months.
The Palestinian Electoral Commission said it was ready to outline a timetable for elections.
Israel has made the restructuring of the Palestinian Authority and its security forces a condition for resuming peace negotiations.
But Mr Arafat has said Israel must pull its troops out of Palestinian territories before any reform can take place.
Military disguise
Sunday's attack in Netanya was the worst for a fortnight. The bomber, disguised as an Israeli soldier, blew himself up at a market.
The Popular Front for the Liberation of Palestine and Hamas claimed responsibility for the bombing.
Israeli sources said a warning about an attack had been received 20 minutes before the bomber set off his explosives but police were powerless to stop him.
"It was a very, very strong blast," said Shimon Genna, a butcher working in the market.
Another witness said the market was relatively empty at the start of the Israeli working week, otherwise the death toll could have been much higher.
Palestinian 'desperation'
An Israeli Foreign Ministry spokesman, Yaffa Ben Ari, said the blame for Sunday's attack lay squarely with the Palestinian Authority as it was "doing nothing to prevent terrorist actions".
But one prominent member of the Palestinian parliament, Hanan Ashrawi, compared the bombing in Netanya to Israeli army attacks.
"On our side, the people who do it are people who are individuals or small groups who are driven to desperation and anger by the Israeli activities, whereas when Israel does it, it does it as a matter of policy," she told the BBC.
"We don't see the same horror as the result of the massive killing of thousands of Palestinians."
US softer on Arafat
Washington has reacted guardedly to the Netanya attack, with Vice President Dick Cheney saying that Mr Arafat could not be expected to control every Palestinian militant.
There was "clearly a class of bombings" he could not rein in, said Mr Cheney, but the Palestinian leader had in the past failed to stop other militants he did control:
"There have in the past been bombings by elements of Palestinian organisations that come under his control and there he clearly has the capacity to act."
US National Security Advisor Condoleezza Rice said for her part that no-ne had ever asked Mr Arafat "to get 100% results".
"What has been asked of him is 100% effort," she said.