An Israeli soldier died on Wednesday after a Palestinian youth stabbed him on board a bus in the north of the country, police said.
"The Israeli soldier who was stabbed this morning by a Palestinian on a bus at the Afula bus station has died of his wounds in hospital," police spokesman Micky Rosenfeld told AFP.
The soldier, identified as Eden Atias, 19, was according to the army stabbed while dozing on a bus that had just arrived in the northern city, and was taken to an intensive care unit.
His funeral was to take place in his northern home town Nazareth Ilit at 2100 GMT.
"We consider this incident to be a terrorist attack motivated by nationalism," Rosenfeld added.
The 16-year-old Palestinian from near Jenin in the northern West Bank, who was in Israel without permits, was detained by passengers and security forces on the bus, he said.
The assailant, identified in Palestinian media as Hussein Ghawdra, told security forces investigating his motive that two family members were imprisoned in Israel, police said.
The Israeli army surrounded the Ghawdra family home in Bir al-Basha, south of Jenin, an AFP correspondent reported.
Hamas, the Islamist rulers of the Gaza Strip, congratulated the suspected attacker.
"Congratulations to the Palestinian West Bank hero who killed an Israeli soldier in Afula this morning," Hamas spokesman Fawzi Barhum wrote on his Facebook page.
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"This is a heroic act of resistance showing that all methods of oppression and terror have not and will not succeed in stopping our people from carrying out jihad and resistance."
Hawkish Deputy Defence Minister Danny Danon of the ruling rightwing Likud party called on Prime Minister Benjamin Netanyahu to suspend the release of Palestinian prisoners, to which Israel committed itself before renewing peace talks with the Palestinians.
“These ongoing talks are deluding both the Israeli public as well as the Palestinians,” he said in a written statement. “We must put an end to this obvious collision course."
Speaking in parliament later in the day, Netanyahu did not imply any intention to impose sanctions on the Palestinians, but blamed them for "incitement" that led to the incident.
Netanyahu said Ghawdra was exposed to "an educational system, with incitement in the Palestinian mosques. If we want true peace, the incitement must stop."
Defence Minister Moshe Yaalon echoed the sentiment, saying in a statement that "terror carried out by individuals who are not part of organisations is primarily a result of the severe incitement in the Palestinian Authority, which even now, while negotiating with us, continues to educate its younger generation to admire terrorists and murder Jews."
There have been several attacks over the past few weeks with deaths on both sides amid mounting tension and speculation about the possibility of a breakdown of peace talks and a return to conflict.
US Secretary of State John Kerry, who was in the region last week in a bid to rescue peace negotiations that are already faltering after just three months of meetings, warned Israelis that they risk the prospect of a third intifada, the Arabic word for uprising.
Robert Serry, the United Nations Special Coordinator for the Middle East peace process, said he was "deeply concerned by recent violent incidents," which he condemned.
"At this sensitive moment, it is imperative to avoid negative actions and support ongoing talks to preserve the remaining chances of achieving a two-state solution in the interest of Israelis and Palestinians alike," he said in a statement.