The European Commission has temporarily halted direct aid payments to the Palestinian government, which is now led by democratically elected Hamas.

European Union foreign ministers are due to meet next week to discuss what to do about future aid.

The EU is the largest donor to the Palestinian Authority, which is reliant on foreign aid.

Palestinian killed in West Bank

Meanwhile, Israeli troops have killed a Palestinian gunman in a clash in a refugee camp near the West Bank town of Nablus, hours after planes bombed three targets in the Gaza Strip.

An Israeli military source said soldiers exchanged fire with gunmen during a raid to arrest wanted armed men near Nablus on Friday.

Medics said a Palestinian gunman was killed and another was arrested in the raid.

Two Israeli soldiers were also wounded in the gun battle.

Earlier on Friday, the Israeli military launched three air raids against targets in the Gaza Strip.

The Brigades are the armed offshoot of the Fatah movement of Mahmoud Abbas, the Palestinian president, who arrived in Gaza City on Thursday to meet senior members of the new Hamas-led government.

PHOTO CAPTION

Palestinians carry the body of Wafa Yaeesh during his funeral in the West Bank city of Nablus April 7, 2006. (REUTERS)