Israeli troops have killed five Palestinians during the biggest raid against West Bank fighters for months, stoking tension as Hamas leaders hold talks to form a new Palestinian government.

Clashes began in Nablus on Thursday after the army expanded the scope of its operation from Balata refugee camp, on the outskirts, into the city centre, blocking main roads and forcing schools and some businesses to close.

Medics said three armed men were among the dead in Nablus on Thursday. Two other men were shot dead when Palestinians confronted troops with stones and petrol bombs.

An Israeli military official in Jerusalem said troops were searching for suspects involved in planning bombings and other attacks.

The Israeli army said its forces had opened fire when they came under attack as they tried to arrest wanted people planning to strike Israel. Two Israeli soldiers were wounded.

Outrage

Angered by the deaths, hundreds of Palestinians marched in the streets shouting "Death to Israelis, death to occupation".

The main targets of the raid have been Islamic Jihad, which carried out two suicide bombings in Israel in recent months, and al-Aqsa Martyrs Brigades, an armed group that is part of the mainstream Fatah movement.

In Gaza, Islamic Jihad said they fired seven rockets at Israel in response to the Nablus operation, in which a senior commander in the group was killed on Tuesday.

Palestinians said more than 50 people had been injured during confrontations and more than two dozen others had been arrested.

The latest deaths in Nablus took the toll to eight over five days.

It was the deadliest raid into the occupied West Bank since mid-2005.

Condemnation

Sami Abu Zuhri, Hamas spokesman, described the Israeli raid as " a war crime aimed at continuing the escalation and undermining Hamas efforts to form a government".

"We are committed to resistance and the occupation will pay the price for these crimes."

Abu Zuhri did not say exactly what Hamas would do.

Though formally committed to destroying Israel, it has largely followed a truce for the past year.

In the Gaza Strip, Hamas continued talks with other parties aimed at forming a government.

But Ahmed Qurie, the outgoing pime mnister, said chances were slim that their long-dominant Fatah party would join a Hamas government.

Qurie said Fatah wanted to concentrate on rebuilding itself after its election defeat.

PHOTO CAPTION

Palestinian mourners are seen next to the body of a 22-year-old man who was shot in the chest while he was standing on the roof of a house during an Israeli raid at the Balata refugee camp in the West Bank town of Nablus Thursday Feb. 23, 2006. (AP)