Top Palestinian militant killed

Iyad Sawalha, 32, was suspected of masterminding at least two bomb attacks on Israeli buses.

Israeli soldiers surrounded the house where he was hiding with his wife at about 0400 (0200 GMT).

They ordered him to come out, but he refused - instead throwing out a grenade that wounded two soldiers, an Israeli defence spokesman said.

In the ensuing gun battle, which lasted an hour, Iyad Sawalha was shot dead, the Israeli authorities said. Palestinian hospital officials confirmed his death.

Witnesses in Jenin said scores of Israeli troops had been involved in the operation.

Israeli satisfaction

The BBC's Elizabeth Blunt in Jerusalem says Israel had accused Mr Sawalha of being responsible for two serious bus bombings in recent months, which killed more than 30 people.

The first blast was in June and killed 17 people. The second occurred last month, claiming 14 lives. In both cases the attacks were carried out using vehicles packed with explosives.

Another car laden with 350kg of explosives was intercepted in September, and again the Israeli authorities said they believed Mr Sawalha was responsible.

Our correspondent says Israeli military sources are now expressing satisfaction at having got the man who was firmly at the top of their wanted list.

Palestinian sources said that Mr Sawalha was known to be the head of Islamic Jihad's military wing in Jenin.

The group has been responsible for a number suicide and car bombings since the start of the Palestinian intifada, or uprising, more than two years ago.

Sensitive timing

There are fears that they will now retaliate for this killing. "We promise to retaliate very painfully," a senior member of the group told Reuters.

Mr Sawalha's death comes just ahead of a visit by a United States envoy this week aimed at stopping bloodshed in the region.

US Deputy Assistant Secretary of State David Satterfield is hoping to renew efforts to introduce a "roadmap" to peace, which involves Palestinian reforms and an Israeli withdrawal from towns in the West Bank.

The killing also coincides with a meeting in Cairo on Saturday for officials from Palestinian President Yasser Arafat's party Fatah and the militant Islamic group Hamas to discuss easing tension and halting suicide attacks inside Israel.