A Palestinian suicide bomber killed two people at an Israeli shopping mall and a car bomb blew up in a Jewish settlement yesterday, dealing heavy blows to a shaky five-month-old truce.

A unit of Palestinian militant group Islamic Jihad claimed the suicide attack on the coastal city of Netanya, a frequent target during a Palestinian uprising. Police said they found the bodies of the bomber and two other people killed by the blast.

The attack occurred less than an hour after the car bomb hit the West Bank settlement of Shave Shomron. Only the driver was hurt and there was no immediate claim of responsibility.

Violence has fallen sharply since Israeli Prime Minister Ariel Sharon and Palestinian President Mahmoud Abbas declared a ceasefire in February, but the truce has been punctured by Israeli raids as well as militant shootings and mortar attacks.

In a farewell video, suicide bomber Ahmed Abu Khalil said: "We reiterate our commitment to calm, but we have to retaliate for Israeli violations."

Islamic Jihad carried out the last suicide bombing in Israel, killing five people outside a Tel Aviv nightclub on February 25, but had since agreed with Mr Abbas and other factions to follow a "period of calm" to the end of the year.

The ground outside the modern shopping centre in Netanya was littered with glass and debris. Police and ultra orthodox-Jewish rescue workers picked through body parts at the type of scene that Israelis had begun to hope they had put behind them.

"It felt like a very, very big bomb," said one medic from the Magen David Adom ambulance service who had rushed to the scene to attend to the wounded and found a middle-aged woman with her clothes in flames.

"She was on fire. Her handbag was burning. She was sitting there in a daze and didn't know what had happened."

The mall was a few hundred metres from the Park Hotel, scene of the deadliest bombing of the Intifada, which killed 30 people in March 2002 and prompted a massive Israeli offensive.

The Palestinian Authority condemned the latest bombing.

"All factions must abide by the truce," said Jibril Rajoub, a security aide to Palestinian President Mahmoud Abbas. "These acts only cause harm to Palestinian unity and serve the right wing in Israel."

Israeli officials said they were still trying to establish whether the bombing in Netanya and the explosion at the settlement were linked.

"These were two terrorist attacks... by the rejectionist front, the groups that are opposed to any accord, to any quiet," said Deputy Defence Minister Yaacov Edri.

Any resurgence of violence could complicate Israel's plan to withdraw settlers from the occupied Gaza Strip and a little of the northern West Bank, starting next month.

Western countries hope the withdrawal could lead to renewed talks on a "road map" for Palestinian statehood, but Sharon has repeatedly said there will be no peace talks until militants are disarmed.

Mr Sharon's security Cabinet discussed recommendations earlier yesterday to keep troops in the northern West Bank after Israel evacuates four isolated Jewish settlements in the area parallel to withdrawing from the occupied Gaza Strip.

Israeli officials said the ministers had accepted the Defence Ministry recommendations, but later clarified that no final decision had been made.

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