Hamas Islamists who control the Gaza Strip claimed responsibility yesterday for the shooting of eight students in a Jewish seminary in Jerusalem, the most lethal Palestinian attack in Israel in two years.

A gunman killed the students late on Thursday at the Merkaz Harav religious school in Jerusalem, but the Israeli government pledged to press on with peace talks with West Bank-based Palestinian President Mahmoud Abbas, Hamas's rival.

"The Hamas movement announces its full responsibility for the Jerusalem operation," a Hamas official said in Gaza. "The movement will release the details at a later stage."

He spoke on condition of anonymity and the group released no official statement. Israeli officials had no immediate comment.

The shooting attack had been greeted with celebrations in the Gaza Strip, where an Israeli offensive in recent days killed more than 120 Palestinians, about half of whom were identified as civilians.

After the attack, the deadliest in Israel since April 2006 and the first in Jerusalem in four years, Israel imposed a security clampdown on the holy city as thousands attended funerals for the Jewish victims, who were aged 15 to 26.

Police set up roadblocks and troops tightened limits on Palestinian travel from the occupied West Bank.

The gunman, whose family in Arab East Jerusalem said he once worked as a driver for the college, was shot dead after opening fire with an automatic rifle at students in the library.

Hamas flags and banners of other Islamist groups flew at the home of the gunman, identified by neighbours as Ala Abu Dhaim, in his early 20s, after what proved to be a suicide mission.

Israel's Internal Security Minister Avi Dichter was quoted on Army Radio as saying hostile Arabs should be moved from Jerusalem to the West Bank.

Israeli President Shimon Peres denounced the attack as "barbaric" because the students were in a place of prayer and had "nothing to do with war".

The Merkaz Harav seminary has long been an ideological base for the Jewish settler movement in the Palestinian territories.

The shooting could further complicate US-backed peace talks between Israeli Prime Minister Ehud Olmert and Abbas. Hamas's claim may also undermine tentative talks undertaken by Egypt, and encouraged by Washington, to foster a truce between the group and Israel.

Israel said negotiations with President Abbas would continue but demanded that he do more to rein in militants. The gunman Abu Dhaim lived in Jerusalem, which is under full Israeli control. Arab residents have open access to Jewish parts of the city and the rest of Israel.

"If Israel really wants to solve all these problems, Israel must look to the negotiations," said Abbas aide Nabil Amr.

Israel deployed thousands of police in Jerusalem and limited Palestinian access to prayers at the al-Aqsa mosque, Islam's third holiest site, police spokesman Micky Rosenfeld said. The al-Aqsa mosque overlooks the Western Wall, Judaism's holiest site, and police feared violence could break out within the Old City.

"The time for us has come to understand that an external struggle as well as an internal struggle are raging," Rabbi Yaakov Shapira told weeping mourners outside Merkaz Harav.

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