An Israeli Army reservist today lost his right eye in an apparent vengeance attack just two days after a Palestinian university student was critically wounded by Israeli occupation troops.

Indicative of the steadily deteriorating atmosphere here in the West Bank was the curfew "until further notice" that the Israeli military authorities announced by loudspeaker late this afternoon in and around the busy shopping street where the morning attack took place.

Because of its tourist attraction as the birthplace of Christ, this largely Christian community has been spared the rigorous curfews and other punitive measures that have been imposed on many other towns since the Israeli Army took control of the West Bank in the 1967 Middle East war.

Palestinian officials here deplored the renewed violence, but suggested that the new incident may have defused a feared larger explosion of anti-Israeli hatred.

Since Friday, word has spread here that Taghrid Butmma, a 19-year-old chemistry and biology student at the Vatican-supported Bethelem University, was clinically dead as a result of wounds sustained while on her way to summer school courses here.

A spokesman at Hadassah Hospital in Jerusalem today expressed surprise that she was still alive and said her death was just a matter of time.

Palestinian sources said details of her critical condition were censored in two Arabic-language newspapers, apparently to prevent protests in other West Bank towns.

Bethlehem Mayor Elias Freij renewed his demands that the Israeli occupation authorities withdraw military patrols from all West Bank towns.

"It is in the hands of the Israeli government to end this cycle of polarization," the mayor said." People here are disgusted."

He was referring to the growing climate of violence that led early this month to still unsolved bombing attacks, which crippled Mayor Bassam Shaka of Nablus and Mayor Karim Khalaf of Ramallah. Those attacks followed by a month the slaying of six Israeli settlers in the West Bank town of Hebron. Earlier the Israeli government had sparked Arab protests by authorizing Israelis to move to Hebron and deciding to establish two Israeli schools there.

Butmma was wounded, according to the Israeli military occupation authorities' spokesman, when a .30-caliber machine gun mounted on a patrolling jeep accidentally went off.

A member of the border patrol was under investigation since Army regulations forbid patrolling populated areas with rounds in a weapon's firing chamber.

The wounded reservist was hit while patrolling on foot with another soldier on Madbasa Street, the town's main shopping thoroughfare.

Although the military authorities insisted it was unclear if his eye had been damaged by a bullet or a thrown stone, police sources here said three bullets were fired and one hit the reservist in the eye.

Freij said that almost all of about 90 men were released by Israeli officials late this afternoon after spending some eight hours in the hot summer sun with their faces on the grond near the site of the shooting incident.

Army vehicles and armed troops cordoned off Madbasa Street and closed shops over a half mile of its length. A spokesman for the occupation authorities said no curfew was further notice.

However, Manger Square, the town's main attraction, was shut for only a half-hour this morning in hopes of not discouraging tourists. Usually as many as 2,000 Israelis flock to Bethlehem every Saturday, but the growing tension has sharply curtailed their visits despite the presence of Israeli troops at key locations.

Local residents have complained of highgg-ghgagnded behavior by Israeli troops, especially the border patrols.

They said border patrol jeeps made a practice of driving the wrong way down one-way streets, forcing motorists to back up to make way for them.

In the nearby village of Battir, residents said border patrol troops last week had set specially trained dogs on workers returning to their homes and had beaten them for no apparent reason.

At Hadassah Hospital, the wounded girls' father, Ismail, a mathematics teacher at the nearby U.N.-funded refugee camp school, condemned the Israeli occupation forces.

Told by doctors that his eldest daughter would die, he said, "In Jordan, Lebanon, Nablus, Hebron, Hahoul it's always the same thing.They kill us. lThis is their policy of the hard hand. They always claim they kill by accident."