Israeli soldiers killed at least two members of the radical Palestinian group Islamic Jihad on Sunday night during an operation in the West Bank.
The men were allegedly involved in planning last week's suicide bombing in the city of Hadera that killed five Israelis and wounded more than two dozen.
In the early evening, troops surrounded a house in Qabatiya in the northern West Bank, the town where the 20-year-old Palestinian who carried out Wednesday's bombing in Hadera lived.
Palestinian witnesses said the men were killed in an exchange of gunfire.
Within hours, Islamic Jihad fighters in the Gaza Strip retaliated by firing at least two homemade rockets into southern Israel.
The attack, which caused no casualties, ended a pledge that Islamic Jihad officials had made hours earlier to end rocket strikes from northern Gaza.
The group said it would halt the strikes -- after days of sporadic attacks that Israel has answered with artillery and missile fire -- only if Israel's military ceased offensive operations against its members
The flare-up in violence began a week ago with Israel's killing of the Islamic Jihad's military leader in the West Bank.
The renewed fighting has imperiled the tentative cease-fire that armed Palestinian groups agreed to in March, while ending, at least temporarily, contacts between Prime Minister Ariel Sharon and Palestinian Authority President Mahmoud Abbas.
-- Scott Wilson