Israel on Friday announced a lockdown on the West Bank city of Hebron and cuts in monthly tax payments made to the Palestinian Authority, after a wave of deadly attacks.
The measures, including increasing Israel's military presence in the West Bank and described as "the most substantial" in two years, come after a surge in nine months of violence and as Muslims near the end of their holy fasting month of Ramadan.
They also come as the Middle East diplomatic quartet said in a much-awaited report aimed at reviving peace talks that Israel should stop building settlements and the Palestinians should cease incitement to violence.
An Israeli man was killed and three close relatives were wounded Friday when a suspected Palestinian "terrorist" fired on their car south of Hebron in the occupied West Bank, the army said.
He was identified as Michael Mark, 48, from the nearby Otniel settlement. His wife and two children were taken to hospital.
On Thursday, a 19-year-old Palestinian fatally stabbed 13-year-old US-Israeli national Hallel Yaffa Ariel in her home at the Jewish settlement of Kiryat Arba adjoining Hebron.
Spokesman Lieutenant Colonel Peter Lerner said the army was imposing a closure on and around Hebron and deploying two additional battalions to the area.
Lerner noted that approximately 80 attacks by Palestinians against Israeli civilians and security forces over the past nine months "originated in the Hebron area".
The measures were decided upon by Defence Minister Avigdor Lieberman and the military, Lerner said, noting they were the "most substantial steps on the ground" since 2014 when Israeli forces were searching for three youths abducted and murdered by Palestinian militants.
Lerner could not say how long the closure on Hebron, the largest West Bank city, would last. But Internal Security Minister Gilad Erdan said it should stay in place "for an extended period of time".
"The terror and incitement atmosphere in the Hebron area is backed by the public and local leadership, and they must feel the consequences of their murderous acts in their daily lives," he said in a statement.
- Cash penalties -
As the security measures were announced, Prime Minister Benjamin Netanyahu ordered that the amount of tax funds transferred monthly to the Palestinian Authority be cut by the equivalent of the fiscal support paid to militants' families.
"Netanyahu has ordered that the entire amount of support for terrorists and their families be deducted from the tax revenues that Israel transfers monthly to the Palestinian Authority," a statement from his office read.
Israel transfers around $127 million in customs duties levied on goods destined for Palestinian markets that transit through Israeli ports monthly.
Netanyahu's office accused the PA of supporting the families of militants with funds transferred "by various laundering methods".
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An Israeli official put the amount of money at "tens of millions of shekels".
Earlier Friday, a young Palestinian woman was killed at a security checkpoint at the Hebron shrine known to Muslims as the Ibrahimi Mosque and to Jews as the Cave of the Patriarchs.
After arousing suspicions she was taken aside for a "thorough check" and "suddenly drew a knife and tried to stab the policewoman who was searching her", a police statement read.
Another officer shot her dead.
Palestinian officials named her as Sarah Tarayra, 27, a relative of Mohammed Nasser Tarayra, 19, who on Thursday fatally stabbed 13-year-old US-Israeli national Hallel Yaffa Ariel in her bedroom at the Jewish settlement of Kiryat Arba adjoining Hebron.
Further north in the West Bank Friday, the Palestinian health ministry said Tayseer Habbash, 63, died from tear gas fired by Israeli forces.
- Ramadan prayers -
AFP journalists at the Qalandia crossing said Palestinians waiting to enter Israeli-annexed east Jerusalem to pray at the Al-Aqsa mosque compound stoned Israeli security forces who responded with tear gas and sponge-tipped bullets.
It was the last Friday of the holy Muslim fasting month of Ramadan, when worshippers flock to Al-Aqsa for midday prayers.
Thousands of Israeli police had deployed in Jerusalem, and the prayers passed off without incident.
At least 214 Palestinians, 34 Israelis, two Americans, an Eritrean and a Sudanese have been killed since the violence erupted last October.
In a report released Friday, the diplomatic quartet of the United States, European Union, Russia and the United Nations said settlements, demolition of Palestinian homes and Israeli confiscation of land were "steadily eroding the viability of the two-state solution".
Its findings and recommendations are to serve as the basis for reviving the Israeli-Palestinian peace process that has been comatose since a US initiative collapsed in April 2014.
Netanyahu said the report "perpetuates the myth that Israeli construction in the West Bank is an obstacle to peace".
But he also welcomed the quartet stating the need for the PA to act "to cease incitement to violence and strengthen ongoing efforts to combat terrorism, including by clearly condemning all acts of terrorism".
Senior Palestinian official Saeb Erekat expressed his disappointment that the report criticised both sides.
"It does not meet our expectations as a nation living under a foreign colonial military occupation," he said.