Israel seals off Palestinian territories after attack

The authorities simultaneously closed entrance to all 21 Jewish settlements in the Gaza Strip to non-residents with Prime Minister Ariel Sharon determined extremists will not flood the territory ahead of August's historic pullout.

The military shut down the territories and swept into Tulkarem to hunt down the perpetrators within hours of what was the first suicide attack in Israel in four and a half months, claimed by radical Palestinian faction Islamic Jihad.

Troops arrested five members of the movement -- outlawed as a terror group by Washington and the European Union -- around Tulkarem, which Israel had returned to Palestinian control last March as a confidence building gesture.

Deputy Prime Minister Shimon Peres urged the Palestinian Authority follow Israel's example and get tough with the militant faction.

"We must demand of the Palestinians that, along with us, they must also begin to deal with Islamic Jihad in the only manner that Islamic Jihad understands. We must operate our way, and they must operate their way," he said.

Israel sharply rebuked Palestinian leader Mahmud Abbas for doing nothing to dismantle armed groups, even through the Palestinian leader denounced the suicide bombing as "a terrorist attack" and vowed to punish the perpetrators.

The territories would remain closed "until fresh orders are received," an army spokesman said, as a planned Israeli-Palestinian security meeting to coordinate the Gaza pullout was cancelled amid the climate of distrust.

Palestinian sources said a police officer was killed and another wounded when the Israeli incursion into Tulkarem was met with exchanges of fire. An army spokesman said two Israeli soldiers were also slightly injured.

The army said the raid was launched to stop Jihad activities in the region, from where the bomber had come.

"The town of Tulkarem is a bastion of Islamic Jihad. This organisation operates there freely," he added.

Military sources said the army was occupying the town, which had been returned to Palestinian Authority control following a peace summit in February.

An Israeli official said plans to transfer control to the Palestinians in the West Bank towns of Ramallah, Bethlehem and Qalqiliya, had now been frozen.