An Israeli helicopter fired two missiles at a car carrying militants from the Hamas (search) group late Tuesday, wounding at least 11 people and raising fears of an intensification of Middle East violence.

Israel's military issued a statement saying the targets were "senior Hamas terrorists ... actively engaged in planning terror attacks."

Hamas officials said one of the people in the car was a midlevel commander, Jamal Jara. It was not clear if he was among the wounded.

Hamas spiritual leader Sheik Ahmed Yassin (search) said Israel would pay a heavy price for the attack. "These massacres and crimes prove that Israel is seeking violence and not looking for peace, security and stability," he told Associated Press Television News.

The strike undermines an informal arrangement in which Israel avoided trying to kill Hamas militants as long as the group halts attacks on civilians inside Israel. Neither side had acknowledged that such an agreement existed.

Witnesses said the Fiat with the militants was traveling toward the Sheik Radwan neighborhood, a Hamas stronghold, when Apache helicopters opened fire.

"I saw a flame hit a small car and people trying to escape from the car," said Raouf Musalam, a pharmacy owner who witnessed the attack. "Apaches were overhead for about two minutes while people rushed to help the wounded people."

A crowd of hundreds of angry Palestinians gathered around the heavily damaged vehicle.

Dr. Jomma Saka of Gaza's Shifa Hospital said 11 people were taken to the hospital. One was in critical condition, another suffered moderate injuries, and the rest were lightly wounded, he said.

During three years of fighting, Israel has frequently carried out airstrikes against militants, most recently last Thursday when Israeli helicopters struck killed three Islamic Jihad (search) militants and two civilians in the Gaza Strip (search).

Earlier Tuesday, Israeli forces entered the West Bank city of Nablus, exchanging gunfire with Palestinian militants and imposing a curfew on the crowded ancient quarter, witnesses said. No casualties were reported from the gunfire.

Israeli forces had withdrawn from Nablus, a center of militant activity, on Monday after a two-week operation — focused around the Balata refugee camp — in which soldiers arrested dozens of suspected militants.

Troops also killed a Palestinian man near the city of Khan Younis (search) in the Gaza Strip, Palestinian hospital officials said. They said the man was killed by random gunfire. The Israeli army said soldiers fired at a group of suspicious figures who were planting explosives near the settlement of Morag. After the incident, the military said soldiers found a tripwire and roadside bomb in the area.

Continued violence has frozen efforts to implement the U.S.-backed "road map" peace plan, which also requires the Palestinians to dismantle groups responsible for three years of attacks against Israelis.

Palestinian Prime Minister Ahmed Qureia (search) has resisted a crackdown on the militants, instead seeking a truce agreement with the militants. Despite Egyptian help, so far he has not succeeded.

The government said Tuesday that the population in Jewish settlements in the West Bank and Gaza had increased by 16 percent in the three years since Sharon assumed power, and now stands at 236,381 people.

The data released by the Israeli Interior Ministry indicated that settlements are growing faster than the government has indicated, especially in several isolated settlements — the same communities that Sharon has hinted he would dismantle in the coming months.

Palestinians say the settlements — built in territories conquered by Israel in 1967 — are making it increasingly harder for them to realize the goal of establishing an independent state in the West Bank and Gaza.

Sharon has traditionally been a champion of settlements established in the areas Israel captured in the 1967 Mideast war. But in June, he committed, with reservations, to implement the road map, which requires Israel to remove dozens of settlement outposts put up since 2001.