Hundreds of Palestinians, including farmers and students, threw stones Thursday at Israelis trying to clear a path for the West Bank (search) separation barrier, drawing fire that killed two and wounded dozens in the bloodiest clashes yet over the partition.

The attempt to block earthmovers, coming a day after the world court wrapped up hearings on the legality of the barrier, appeared to signal a new protest tactic. In the past, demonstrators generally stayed away from construction crews.

In the Gaza Strip, two Palestinian gunmen with ties to Yasser Arafat's Fatah (search) movement killed an Israeli soldier at the Erez border crossing (search) before being gunned down by troops. Israel temporarily closed the crossing, through which 19,000 Palestinians pass daily to jobs in Israel.

Also Thursday, Palestinians fired from a building inside Arafat's headquarters at Israeli troops in jeeps parked outside, the army and Palestinian witnesses said. Soldiers returned fire, but there were no reports of injuries. Later, a Palestinian near the compound tried to throw a firebomb at troops. The Israeli military said he was killed by return fire; the Palestinians said the man was wounded.

The protests over the barrier erupted in Bidou, Beit Surik and Beit Iksa, three villages close to one another and just northwest of Jerusalem.

Hundreds of Palestinians, including many farmers, threw stones at earthmovers leveling ground on terraced slopes for the construction of another section of the barrier. In Bidou, teens and young men used a wrecked car as a shield, dashing out from behind it to hurl stones from slingshots. Middle-aged men scuffled with soldiers and paramilitary border police.

Troops fired tear gas, rubber-coated steel pellets and live rounds, witnesses said. Two men in their 20s were killed and 42 protesters were hurt, including eight by live fire and 12 by rubber bullets, Palestinian hospital officials said. More than 20 suffered beating injuries, the doctors said.

The Israeli military and police denied officers used live fire, though an Associated Press reporter saw two men with live fire wounds at Ramallah Hospital. Police said six officers were hurt in the clashes, including three who were hospitalized.

Ibrahim Mughar, the school principal in Beit Surik, said 10 West Bank villages northwest of Jerusalem would be affected by the planned barrier section and cut off from much of their farmland. "This is a new uprising," Mughar said of the protests, "an uprising of the wall."

The Palestinians say the barrier, which is to run up to 420 miles, amounts to a land grab meant to deprive them of a state. The planned route dips deep into the West Bank. The section already built, about one-fourth of the total route, disrupts the lives of thousands of Palestinians, hampering access to fields, schools, jobs and services.

Israel says it needs the fortifications as a last line of defense against Palestinian suicide bombers who have killed more than 450 Israelis in more than three years of fighting.

The International Court of Justice at The Hague, Netherlands, concluded three days of hearings on the barrier Wednesday, and was to issue a nonbinding ruling in the coming months.

The Gaza attack began about 6 a.m. when two Palestinians with assault rifles and hand grenades fired at Israeli soldiers at the Erez crossing. One soldier was killed in what witnesses said was an hourlong exchange of fire.

The Al Aqsa Martyrs' Brigades, a militant group linked to Fatah, claimed responsibility. On Jan. 14, a female suicide bomber from Hamas (search) killed four Israeli guards at Erez.

Also Thursday, Palestinian Prime Minister Ahmed Qureia (search) complained that Israel's raid a day earlier of three Ramallah bank branches was "one of the ugliest crimes of the occupation" and was meant to undermine the Palestinian Authority. Qureia said Israel could have asked for Palestinian help in investigating suspicions about particular accounts.

In the raid, Israel seized at least $6.7 million it said was earmarked for terrorism. Palestinian officials feared the raid would destroy faith in the banking system, but there was no run on the banks Thursday.

U.S. State Department spokesman Richard Boucher said it would be better if Israel coordinated with the Palestinians on freezing and seizing funds earmarked for militant attacks.