Two Palestinians burst into this West Bank settlement Friday and opened fire on Jewish seminary students gathered for a Sabbath dinner in a communal dining hall, killing four Israelis and wounding eight, the army said.

The rampage, which left the two gunmen dead, ended a lull in Palestinian attacks. It came a day after Israeli troops killed eight Palestinians in arrest raids, and hours after the Islamic militant group Hamas announced it would carry out more bombings and shootings.

The militant Islamic Jihad group claimed responsibility for the attack on Otniel, a small settlement near the Palestinian town of Hebron. A spokesman in Damascus, Syria, told the Qatar-based TV satellite station Al Jazeera that the group was avenging the killing of Hamza Abu Roub, a militia leader in the town of Jenin, on Thursday.

Early Saturday, a car bomb went off in downtown Jerusalem, causing no injuries, Israel Radio report. A suspect in the bombing was arrested, the report said. The blast went off near the downtown police station, in a busy area of pubs.

The car bomb and the shooting in Otniel, a settlement near the Palestinian city of Hebron, came hours after the Islamic militant group Hamas announced it would not halt bombings and shootings, despite its participation in Egyptian-led talks in Cairo on suspending attacks in Israel.

A leader of Hamas, Abdel Aziz Rantisi, said Friday that "it is natural for the Palestinians to take revenge for every drop of blood shed by Israeli aggression." There had been no fatal shootings and bombings in Israel in the past month, though a rabbi was killed last week in a Palestinian roadside ambush in Gaza.

The attack on Otniel began at about 7:45 p.m. Friday, at a time when the dining hall of the Jewish seminary in the settlement was packed with students gathered for the festive Sabbath meal.

One of the attackers sneaked into the seminary's crowded communal dining hall through the kitchen and opened fire in all directions, TV and radio reports said. He remained holed up in the hall after the initial shooting and was only killed after a 30-minute firefight with security forces, Israel TV's Channel Two said.

A second assailant escaped, and Army Radio said he was later killed by troops pursuing him.

Most of those killed and wounded were students, TV reports said. Reporters arriving in Otniel were stopped at the gate and not allowed to enter.

In the past 27 months of fighting, Palestinian militants have repeatedly targeted Jewish settlements, which are built on lands the Palestinians claim for their future state. On Thursday, Israeli officials said the military is erecting 300-yard-wide buffer zones around settlements to keep out militants. Palestinians complained that Israel was further expanding settlements with the fenced-in no-go zones.

Friday's shooting came only hours after Hamas founder and spiritual leader Sheik Ahmed Yassin told 30,000 supporters at a rally in Gaza City that the group would keep attacking Israelis.

"The march of martyrs will move forward," Yassin told the crowd at a soccer stadium. "Resistance will move forward. Jihad will continue, and martyrdom operations (suicide attacks) will continue until the full liberation of Palestine."

The rally marked the 15th anniversary of Hamas' founding. Since 1987, Hamas has carried out scores of bombings that have killed hundreds of Israelis.

Hamas and Yasser Arafat's Fatah faction in recent weeks have been holding negotiations in Cairo aimed at bringing a halt to attacks, but the militant group has sent mixed signals on whether it would do so.

The group's leaders have said publicly that Hamas would not change tactics.

However, a source close to the truce talks told The Associated Press this week that Hamas promised the Egyptians to halt attacks in Israel for now. Several Fatah officials also said Hamas was sending conciliatory signals.

Israel has said the militias are not serious about stopping attacks and that the relative lull of the past month was a result of Israel's relentless strikes against militias. "This is an ongoing, continuous war," said Raanan Gissin, an adviser to Prime Minister Ariel Sharon.

Israel's massive military presence in the West Bank -- troops control all but one major population center -- has made it increasingly difficult for militias to operate.

In the West Bank town of Nablus, three successive leaders of the Al Aqsa Martyrs' Brigade, a militia linked to Fatah, have been arrested in the past three months. Fugitives have trouble finding a hideout because sympathizers don't want to harbor them for fear their homes will be destroyed by the Israeli military, residents say.

The Palestinians have accused Israel of trying to sabotage truce efforts because in a period of calm, Israel would come under greater pressure to make concessions.

Palestinian Cabinet Minister Saeb Erekat said Friday, before the attack on Otniel, that Israel was hoping to disrupt the Cairo talks by trying to provoke Palestinian retaliation for the strikes against militia leaders.

"Sharon's endgame is to sabotage the Egyptian effort," he said.