Israeli soldiers killed seven Palestinians in West Bank raids Thursday and reimposed a curfew on Bethlehem after briefly withdrawing over Christmas from the city where Jesus is believed to have been born.

Those killed included five wanted men and two unarmed bystanders -- a high school student and a traffic policeman. Twenty Palestinians and five Israeli soldiers were wounded in the fighting.

In one raid, Israeli troops drove into the compound of the main hospital in the town of Ramallah and fired at the guard room, killing one guard and arresting three, Palestinian officials said. The army had no immediate comment.

An Israeli official, meanwhile, confirmed that the military has begun setting up buffer zones around Jewish settlements in the West Bank to keep out Palestinian attackers. Palestinian officials complained that Israel was further expanding settlements with such fenced-in no-go zones.

Two of Thursday's arrest sweeps were carried out in Ramallah.

In the morning, soldiers stopped a car with two wanted Hamas activists in downtown Manara Square. Troops opened fire when one of the men drew a gun, killing him, the army said. An assault rifle, two guns and cash were found in the car, the army said. Several Palestinians threw stones at soldiers during the arrest, and troops fired toward the stone-throwers, killing a 19-year-old traffic policeman, hospital officials said.

Later Thursday, a van carrying soldiers drove into the compound of Ramallah Hospital and stopped outside the guards' room, said Mustafa Issa, the governor of Ramallah. Soldiers demanded that the guards surrender and fired toward the window after the first calls were ignored.

Three guards came out, waving white T-shirts, and soldiers then fired again toward the window to flush out stragglers, Issa said. A fourth guard was found wounded in the room, and was taken away, the governor said. Israeli troops later told Issa the guard had died.

In the town Tulkarem, Israeli soldiers killed Jamal Nader, 28, a local leader of the Al Aqsa Martyrs' Brigade, a militia linked to Yasser Arafat's Fatah movement.

In a fourth incident, in the town of Kabatiya, soldiers surrounded the home of Hamza Abu Roub, 37, a local leader of the Islamic Jihad group, and demanded that he surrender. Abu Roub sent out his wife and children, a neighbor said. The fugitive then appeared near the wall of his house and began shooting, drawing heavy return fire. Bursts of gunfire echoed through the town, residents said.

Abu Roub was killed in the gunbattle, and four soldiers were injured, including one who was in serious condition. Troops blew up Abu Roub's home.

Both Abu Roub and Nader, the militiaman from Tulkarem, were at their homes even though they were fugitives. Wanted Palestinians have found it increasingly difficult in recent weeks to find refuge in homes of supporters because troops have been demolishing homes of those who hide wanted militants, according to residents.

Also Thursday, in the West Bank city of Nablus, Israeli soldiers searching for wanted men killed a Palestinian gunman in a firefight in the downtown area, or Casbah, the army said. An Israeli soldier was lightly wounded.

Later Thursday, soldiers reimposed an open-ended curfew on Nablus, confining tens of thousands of Palestinians to their homes until further notice. The residents of Nablus have been under curfew for much of the time since troops reoccupied the city in June.

Hundreds of Palestinians threw stones at soldiers who opened fire, killing an 18-year-old Palestinian and wounding 20, including three who were seriously hurt. The teenager was carrying books and was not involved in stone-throwing, witnesses said.

In Bethlehem, soldiers enforcing a curfew fired tear gas and stun grenades to force residents to return to their homes. Troops had withdrawn to the outskirts of the town on Christmas Eve.

The Israeli army controls every major West Bank Palestinian town or city, except Jericho, a response to a deadly wave of suicide bombings and attacks against Israelis.

Jewish settlements in the West Bank and Gaza have frequently been targeted by Palestinian militants, with gunmen cutting through perimeter fences.

The army confirmed Thursday that it was creating 300-meter-wide buffer zones around settlements to keep out attackers.

The zones will have beefed up patrols and special observation towers, said Raanan Gissin, an adviser to Prime Minister Ariel Sharon. "It's just to ensure that you have a forward defense deployment so you don't engage the terrorists inside the compound or inside the village, you try to intercept them outside the fence," he said.

Palestinian Cabinet minister Saeb Erekat said the buffer zones are an attempt to expand settlements and sabotage a U.S.-backed peace plan which envisions Palestinian statehood by 2005. "Sharon wants to make sure by 2005 that it will be impossible to create a Palestinian state because of the settlements," Erekat said.

More than 200,000 Israelis live in more than 150 Jewish settlements scattered across the West Bank and Gaza. Palestinians view the settlers -- many of them armed -- as legitimate targets in their struggle for independence.